Local governments seek federal preemption of Internet regulation

In the early 2000s as legacy cable companies contemplated offering Internet-protocol (IP) based services including Voice Over Internet Protocol (VOIP), they feared local governments that franchised their decades-old cable television services would demand they offer IP services to all neighborhoods within their jurisdiction. That prospect was very real possibility given their residents had other options for television service including over the air broadcast and satellite, but would need landline infrastructure built out in order to provide universal Internet access as demand for Internet service jumped. Also, by offering voice service via VOIP, cablecos began emulating telephone companies that are required to offer universal service to any premise requesting it.

To head off what to them appeared to be a costly prospect, cablecos heavily lobbied state governments to preempt the locals by giving state public utility commissions franchise authority over IPTV. While nominally limited to video services, for both cablecos and phone companies the move forestalled for many years any local requirements they upgrade and build out their Internet infrastructure since their video services are typically bundled as part of landline premise Internet service.

Now more than a decade later, local governments are getting in on the preemption game. Since their oxen were gored by their states at the behest of the legacy incumbent cablecos and telcos, they are looking to the federal government for relief. An example is the Federal Communications Commission’s order earlier this year to preempt statutes in two states barring local governments from building their own infrastructure. Doing so would allow local governments to get around the state sanction of the incumbents’ redlining practices.

In Arizona, local governments appear to be looking to the feds to resolve a dispute involving the city, a legacy cableco and Google Fiber over the city’s regulation of video services. “The City believes these questions will more likely be resolved more definitively in the future by the Federal Communications Commission or a similar authority,” said Scottsdale Chief Information Officer Brad Hartig in a statement. (H/T to DSLReports).

In California, two legacy telcos are making an argument that would place Internet services in a regulatory non man’s land, subject to neither state nor federal jurisdiction. Frontier and Verizon contend regulation of Internet service falls under federal jurisdiction per the FCC’s order classifying Internet as a common carrier telecommunications service under Title II of the federal Communications Act. But at the same time, they argue that order does not preempt California law giving the California Public Utilities Commission jurisdiction over legacy (non IP-enabled) telephone service but not Internet services. (Item here at Steve Blum’s Blog)