The FCC and State Laws

FCC_New_LogoThe DC Circuit Court of Appeals issued a long decision yesterday that says that the FCC’s rules on Network Neutrality were unenforceable as written. A large number of experts saw this coming and the general belief in the industry was that it would eventually be overturned. I will talk more about this topic in a later blog.

But the court order had another interesting discussion that could have a big impact on fiber deployment. Here is the Court’s decision. In paragraph 706 the court option says:

The statute directs the Commission to “encourage the deployment on a reasonable and timely basis of advanced telecommunications capability to all Americans . . . by utilizing . . . price cap regulation, regulatory forbearance, measures that promote competition in the local telecommunications market, or other regulating methods that remove barriers to infrastructure investment.”

What this paragraph means is that the Court thinks that the FCC already has the regulatory authority to get rid of state-imposed barriers against competition from municipal networks. There are a number of states that have created barriers against municipal competition over the years. Some large states like Texas and Florida basically have an outright ban against municipalities building fiber networks for commercial purposes. Other states instead have restrictions that make it hard for a municipality to get into the fiber business on one way or the other.

As my blog showed yesterday there are large swaths of the country that have below average Internet speeds due to the incumbent providers not building or upgrading networks that can provide fast Internet. And yet, there are hundreds of communities that are clamoring for faster Internet. Roughly 150 communities have already built a fiber network to serve business and residential customers. Hundreds more have built networks that serve government locations and sometime larger business customers.

I have seen numerous surveys where 70% or more of the households in a given community want faster Internet. Many towns, particularly smaller rural ones are falling onto the wrong side of the digital divide. They live in areas where DSL is still only delivering 1 – 3 Mbps speeds and where cable networks have not been upgraded to DOCSIS and newer technologies.  And in these town whatever Internet they have generally doesn’t reach very far outside of town borders, so people within a short distance from town are still stuck today with dial-up or satellite Internet.

While the Courts opinion yesterday is not going to change any of the state laws, it might encourage the FCC to tackle this issue again. It’s common knowledge that the Internet speeds in this country are below average, and it’s finally dawning on a lot of people that Internet networks are being built in a patchwork manner, with some places with blazingly fast speeds and others stuck with decades-old technology.

I think by now that it’s pretty obvious that some incumbent providers are not ever going to make the investments in smaller towns to upgrade the networks. So people in these areas are going to fall further and further below the national average Internet speed, currently at around 18 mbps download. And for those communities this is dire. We tend to think of fast Internet as mostly a tool to watch movies online. But it’s easy to forget that fast Internet is needed for a lot of daily functions. For example, many college courses are now offered only online and somebody on a slow connection is shut off from getting college credits in this way. So much of what we do has now moved to the Internet, and many sites that we all take for granted every day are nearly non-functional on a slow Internet connection.

People with slow Internet are moving into the slow lane of our economy. So one can hope that the FCC will be emboldened by this language from the DC Circuit Court of Appeals and will tackle this issue again. They looked at the issue in 2004, but the FCC was not even sure then that they had the authority to do this. Hopefully this will give them a reason to look at it again. There are a whole lot of people who live in places that will never have fast Internet unless their local government steps in to fill the gap. It’s nice to think that commercial companies ought to do this everywhere, but that just is not the reality.

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