ALEC Urges FCC to Respect Federalism

Recently two local governments have filed petitions with the Federal Communications Commission (FCC) in an attempt to have the federal government preempt state laws on local government-owned broadband networks. In response, ALEC sent initial comments, signed by 20 state legislators, and reply comments to the FCC stating our objections to these petitions.

What these petitioners are asking for is a gross distortion of federalism, where the federal government would bypass states and effectively grant municipalities the power to go into the broadband business themselves, a power that states never gave them. According to Matthew Berry of the FCC, there are nearly two-dozen states that restrict municipal broadband operations in some manner. These states recognize the importance of limited and impartial government.

There are number of reasons why states have chosen to regulate municipal broadband networks. The first being that these networks can be a liability for taxpayers if they are poorly run. Taxpayers should not be compelled to subsidize bailouts of failed government-owned networks through taxes, fees or higher utility rates.

It’s also important that states recognize the inherent conflict of interests that result when government competes with private industry. These conflicts exist when local governments engage in direct competition with private market providers over which the same local governments exercise regulatory authority. Such conflicts create temptations for local governments to misuse their regulatory powers to favor themselves over private competitors.

ALEC is pleased to find itself in agreement with many other state government organizations such as The National Council of State Legislators, The Council of State Governments and The National Governor’s Association, all of which oppose the preemption petitions now before the FCC.

States – not the federal government – are responsible for creating and overseeing local governments. Federal preemption would sever accountability between local and state governments. States would find themselves in an untenable situation in which they could not exercise governing responsibility over their own agents.