Federal court upholds limits on where EPB may offer broadband

FCC can't overrule state restrictions on where utilities provide services

Federal Communications Commission (FCC) Chairman Tom Wheeler testifies on Capitol Hill in Washington, Thursday, Dec. 12, 2013, before the House Energy and Commerce Committee hearing on cell phones on planes. As one part of the federal government looks to remove restrictions on making phone calls from airplanes, another agency is apparently considering its own prohibition. Wheeler told members of Congress that while his agency sees no technical reason to ban calls on planes, Transportation Secretary Anthony Foxx told him Thursday morning that the DOT will be moving forward with its own restrictions. (AP Photo/Susan Walsh)
photo David Wade

A federal appeals court has upheld Tennessee restrictions on where municipal power utilities may offer internet, cable TV and phone service, limiting attempts by EPB to expand its high-speed broadband into under-served areas of Tennessee.

In a 25-page opinion issued Wednesday, the U.S. Court of Appeals for the 6th Circuit ruled the FCC overstepped its authority last year when it voted 3-2 to overturn state restrictions in Tennessee and North Carolina on municipal broadband providers like EPB. The court ruling means EPB will not be able to extend its fiber optic telecom services outside of its 600-square-mile service territory in the Chattanooga area unless state lawmakers modify the territorial limits put on EPB and other municipal power utilities in 1999.

The decision is a win for private-sector providers of broadband internet, who have complained about having to compete with government-owned utilities coming into their service territories.

But EPB President David Wade said the ruling underscored the need for Tennessee lawmakers to develop a better way to expand high-speed broadband, which a recent state study found is not available to an estimated 834,545 Tennesseans, or nearly one of every eight residents in the state.

"Ultimately, Tennessee's broadband gap is a problem for Tennesseans, and we need a Tennessee solution," Wade said. "We will continue to work with the growing number of state legislators and grassroots citizens interested in removing the barriers that prevent EPB and other municipal providers from serving our neighbors in surrounding areas who have little or no access to broadband."

EPB, which earned Chattanooga the name "Gig City" by offering the fastest internet service in the Western Hemisphere, with up to 10 gigabits-per-second speed, wants to expand its fiber optic network into neighboring areas of Hamilton and Bradley counties, where no broadband service is now available. EPB petitioned the FCC to expand its service and the commission voted to allow such an expansion, even though Tennessee state law now limits municipal power utilities such as EPB to serving only their power service territory defined by the Tennessee Valley Authority.

AT&T says it is working to expand broadband services where enough consumers request the service to justify extending fiber lines to rural areas. But AT&T and other incumbent providers of telephone, cable TV and internet services want the state to keep municipalities and electric cooperatives from expanding into the areas they already serve.

"This case was never about the best way to get broadband into rural communities," AT&T Senior Vice President Jim Cicconi said in a statement about the court's ruling. "It was about whether the FCC had legal authority to pre-empt state law. Despite clear Supreme Court precedent, and without explicit pre-emption authority in the statute - which the Supreme Court has said is necessary - the FCC nonetheless went forward."

Cicconi noted that the U.S. Department of Justice declined to defend the FCC decision to overturn state laws in Tennessee and North Carolina.

Tennessee Attorney General Herbert Slatery III, who argued against the FCC overruling Tennessee's restrictions on municipal broadband, said the case was never about access to broadband.

"Instead, it was about preventing the federal government from exercising power over the state of Tennessee that it does not have," he said.

Even some backers of municipal broadband said the court ruling helped clarify the choice ahead for the Tennessee Legislature. Next year, lawmakers will consider proposals to end state restrictions on where municipal power utilities may offer broadband and lift the prohibition on electric cooperatives getting into telecom.

"I'm surprised that the ruling came so quickly, but now it solidly puts the ball in the court of the state Legislature," said state Sen. Janice Bowling, R-Tullahoma, who plans to reintroduce legislation next year to remove state limits on municipalities and power co-ops offering broadband. "Is the state going to continue to block its citizens from having access to 21st century technology so key to our economic future?"

Studies by both the state Department of Economic and Community Development and the Tennessee Advisory Commission on Intergovernmental Relations this spring underscored the need to expand high-speed broadband across Tennessee. Both studies suggested municipalities and nonprofit co-ops could play a key role in expanding fiber optic services in rural areas.

State Rep. Kevin Brooks, R-Cleveland, said AT&T, Charter Cable and other investor-owned utilities have had years to extend high-speed broadband into more rural areas of the state but have yet to do so. Brooks said he feels a bit like former Alaska Gov. Sarah Palin, who famously said she could see Russia from her Alaskan home.

"I can see the Gig City from my house, but I can't get it," Brooks said. "We realize how great it is to have the Gig City in Chattanooga. Just think how great it would be if we can become the Gig State, with access to high-speed broadband everywhere in Tennessee."

Chattanooga markets itself as the Gig City, after being the first city in America to offer community-wide gigabit-per-second broadband speed in 2010. Such service is about 50 times the national broadband average - or enough bandwidth to download an entire movie in about two minutes - and EPB has since upgraded its service to provide up to 10 Gigs.

Brooks said getting to Gov. Bill Haslam's "Drive to 55" goal of having 55 percent of adults with college degrees or certificates "will be very hard, if not impossible, if we have the equivalent of a 35 mph speed limit on our broadband speed" for distance learning, Brooks said.

Both Brooks and Bowling said they think the recent Economic and Community Development study on broadband will convince more lawmakers next year to remove limits on where and who may offer fiber optic services.

Common Cause Adviser Michael Copps said such efforts face well-financed campaigns by private utilities opposed to more competition.

"Let's be clear: Industry-backed state laws to block municipal broadband only exist because pliant legislators are listening to their Big Cable and Big Telecom paymasters," Copps said. "These corporate providers invest in campaign contributions rather than in deploying high-quality broadband."

But Berin Szoka, president of TechFreedom, said "government-run broadband should be a last resort, not a go-to solution." Szoka said the FCC "took enormous chutzpah to try to pre-empt state broadband laws" in its 3-2 decision last year, which Szoka said was unconstitutional for a federal agency.

"The greatest irony here is that the real barriers to deployment come from local governments themselves, and the FCC could help identify ways to cut red tape, lower fees, and build smarter infrastructure that can facilitate deployment," he said.

FCC Chairman Tom Wheeler, who pushed the commission last year to allow more municipal broadband services despite state laws limiting such service, bemoaned the court's decision:

"While we continue to review the decision, it appears to halt the promise of jobs, investment and opportunity that community broadband has provided in Tennessee and North Carolina," he said. "In the end, I believe the Commission's decision to champion municipal efforts highlighted the benefits of competition and the need of communities to take their broadband futures in their own hands."

Wheeler said last year that states like Tennessee and North Carolina had created "thickets of red tape designed to limit competition." The FCC said federal policy encourages more high-speed broadband, but the court ruled the statute doesn't give the FCC the power to overrule state authority to regulate utilities.

In the past year and a half, Wheeler said more than 50 municipalities have begun offering high-speed broadband services.

"The efforts of communities wanting better broadband should not be thwarted by the political power of those who, by protecting their monopoly, have failed to deliver acceptable service at an acceptable price," Wheeler said. "The FCC's mandate is to make sure that Americans have access to the best possible broadband. We will consider all our legal and policy options to remove barriers to broadband deployment wherever they exist so that all Americans can have access to 21st Century communications."

Contact Dave Flessner at dflessner@timesfreepress.com or at 757-6340.