The Federal Communications Commission today voted to preempt state laws in North Carolina and Tennessee that prevent municipal broadband providers from expanding outside their territories.

The action is a year in the making. FCC Chairman Tom Wheeler announced in February 2014 his intention to override state laws designed to protect private cable companies and telcos from public sector competition. Wheeler took his cue from the federal appeals court ruling that overturned net neutrality rules; tucked away in that decision was one judge's opinion that the FCC has the authority to preempt "state laws that prohibit municipalities from creating their own broadband infrastructure to compete against private companies."

Nineteen states have such laws, often passed at the behest of private Internet service providers that didn't want to face competition. Communities in two of the states asked the FCC to take action. The City of Wilson, North Carolina and the Electric Power Board (EPB) of Chattanooga, Tennessee filed the petitions that led to today's FCC action. Each offers broadband service to residents and received requests for service from people in nearby towns, but they alleged that state laws made it difficult or impossible for them to expand.

“You can’t say you’re for broadband and then turn around and endorse limits on who can offer it,” Wheeler said today. “You can’t say, ‘I want to follow the explicit instructions of Congress to remove barriers to infrastructure investment,' but endorse barriers on infrastructure investment. You can’t say you’re for competition but deny local elected officials the right to offer competitive choices."

States have given municipalities the authority to offer broadband but made it difficult with tons of bureaucratic requirements, he said. "The bottom line is some states have created thickets of red tape designed to limit competition," he said. Local residents and businesses are the ones suffering the consequences, he argued, pointing to members of the two communities in the audience.

Some businesses are forced to move to other towns for lack of better broadband, he said. Wheeler described one person who pays $316 a month "for a collage of services that includes two mobile hotspots," while living less than a mile from a gigabit network. One woman in the FCC's audience has to drive her son 12 miles to a church where he can access Internet service fast enough to do schoolwork, he said. These people are "condemned to second-rate broadband."

Both EPB and Wilson have advanced networks but are surrounded by communities that lack advanced service, FCC wireline competition official Gregory Kwan told commissioners.

"EPB is an island of competitive high speed broadband service surrounded by areas for the most part with single or no provider of advanced broadband," he said. "Wilson's network... is a similar situation, an island of competition surrounded by a sea of little to no options for world class competitive broadband services."

"Our focus is really about wanting to serve our neighbors who have little or no access to broadband," EPB communications VP Danna Bailey told Ars yesterday. "We’re hoping that the FCC votes in favor of our petition, but we’ll have to understand any ramifications of anticipated legal challenges before we move forward."

The vote was followed by applause from the crowd.

Democrats say yea, Republicans nay

The vote was split 3-2 along party lines, with Wheeler joined by fellow Democrats Mignon Clyburn and Jessica Rosenworcel.

"There are provisions that limit service by municipalities to specific areas but not others even if the local governmental entity has a pre-existing telecommunications network in that region," Clyburn said in today's meeting. "And just what has been the result? Certain communities have the capacity to achieve limitless outcomes, while others a few yards from town are stuck in a digital desert deprived of the means to close persistent opportunity gaps."

Rosenworcel likened municipal Internet service to "broadband barn raising."

"The Electric Power Board of the City of Chattanooga now offers gigabit service to all of its customers, and the residents of Wilson County have access to a municipal network that also supports gigabit speed," she said. "Now both municipal providers want to extend their broadband offerings to other consumers nearby. In communities where the speeds are slower and the competitive choice more limited. So today, we tear down barriers that prevent them from expanding their broadband service and offering more consumers more competitive choice."

Republican Ajit Pai dissented, pointing out that the laws in the two states were passed by legislatures controlled by Democrats and are now being overturned by unelected officials.

"I do not believe this agency has the legal power to preempt," Pai said.

Section 706 of the Telecommunications Act of 1996 requires the FCC to encourage the deployment of broadband to all Americans by using "measures that promote competition in the local telecommunications market, or other regulating methods that remove barriers to infrastructure investment." The ability to remove barriers is what Wheeler is using to preempt the state laws in North Carolina and Tennessee.

Pai pointed out that Section 706 includes no specific language on preempting state laws. According to Pai, Democrats conceded that the FCC can't overturn total state bans on municipal broadband; rather, they argue only that they can lift restrictions that limit rather than ban the municipal networks, he said. In North Carolina and Tennessee, the providers are being prevented from expanding their service territory, but aren't banned from offering the service within their territory.

"This yields an exceptionally strange result," Pai said. "While a state would be free to ban municipal broadband projects outright, it would be forbidden from imposing more modest restrictions on such projects. In other words, the most severe state law restrictions on municipal broadband projects, prohibitions, could not be preempted, but less stringent restrictions could be preempted." This could lead states to impose complete bans rather than limited restrictions, he said.

Republican commissioner Michael O'Rielly called it "arrogance" to rewrite state laws.

"It is not the government's role to offer services instead of or in competition with private actors," O'Rielly said. Today's order relies on an "illogical and tortured" reading of Section 706, he said.

The FCC could preempt laws in more states if communities file petitions asking the commission to do so. But the FCC's vote isn't the end of the road. Wheeler is relying on an untested legal theory that could face judicial scrutiny. Besides court challenges, Republicans in Congress have proposed legislation removing the FCC's Section 706 authority.

The FCC is also scheduled to vote today on reclassifying Internet service providers as common carriers under Title II of the Communications Act. Title II includes authority to preempt state laws that prohibit the ability of "any entity" to provide telecommunications. But this authority has already been tested, with the Supreme Court in 2004 agreeing with the FCC that "any entity" only referred to private entities.