Federal appeals court upholds NC’s 2011 law limiting municipal broadband

A federal appeals court reinstated a 2011 North Carolina law that blocks local governments from launching their own broadband service as an alternative to Time Warner Cable or other telecommunications providers.

The appeals court ruling, issued Wednesday, threw out a policy by the Federal Communications Commission intended to clear the way for towns in North Carolina and elsewhere to offer their own fiber services. The FCC issued its broadband policy in 2014 specifically in response to requests by the City of Wilson and Chattanooga, Tennessee.

Wilson, about 55 miles east of Raleigh, launched its high-speed internet service, called Greenlight, in 2008. Greenlight offers phone, television and internet service to 8,200 customers, more than a third of the town’s households and businesses.

North Carolina’s 2011 law prevents towns from launching a new broadband service or expanding an existing one. The law rankled officials in Wilson, who had planned to offer Greenlight in five neighboring counties.

However, Wilson officials achieved their short-term goal and expanded Greenlight to the town of Pinetops, in Edgecombe County, while the FCC ruling was in effect and North Carolina’s law was suspended.

The U.S. 6th Circuit Court of Appeals said that the FCC lacked legal authority to override state law. North Carolina and Tennessee had filed the court case against the FCC.

FCC Chairman Tom Wheeler expressed disappointment about the appellate ruling. The FCC had adopted its policy in 2011 to promote broadband competition.

“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 in a statement. “The FCC’s mandate is to make sure that Americans have access to the best possible broadband.”

The FCC has not decided whether it will appeal the court’s ruling.

Wilson officials called the appellate ruling a setback. Wilson had hoped to offer Greenlight to its electric service customers in neighboring counties.

“We’re certainly disheartened,” said Greenlight general manager Will Aycock. “Ultimately our goal and our desire is to expand our infrastructure to all utility customers who desire our service.”

North Carolina’s 2011 law doesn’t expressly forbid towns from offering broadband service but it creates standards that were seen as impediments. Among other things, the law says towns can’t subsidize their broadband operations from other funds and it bars towns from pricing the service below the cost of providing it.

While the appellate court found that the FCC had overstepped its bounds, the ruling notes that Greenlight has provided many benefits for Wilson, including free WiFi to the entire downtown area, noting that the top seven employers in Wilson are Greenlight subscribers.

U.S. Sen. Thom Tillis, a Republican from Mecklenburg County, hailed the court ruling, saying: “Today’s ruling affirms the fact that unelected bureaucrats at the FCC completely overstepped their authority by attempting to deny states like North Carolina from setting their own laws to protect hardworking taxpayers and maintain the fairness of the free market.” Tillis was speaker of the House when the law passed.

This story was originally published August 10, 2016 at 5:47 PM with the headline "Federal appeals court upholds NC’s 2011 law limiting municipal broadband."