Court decision deals blow to cities' efforts to compete with large internet providers

A US federal-court decision yesterday dealt a blow to the efforts of federal regulators to help cities build internet services capable of competing with large providers such as Comcast and Time Warner Cable.

The Federal Communications Commission (FCC) was told that it did not have the power to block state laws that critics claimed hit the spread of cheap, publicly run broadband service.

According to commentators, the ruling marked a significant defeat for a federal agency that had over the past few years, turned "competition" into a literal mantra, with its chairman, Tom Wheeler, speaking about it at almost every possible opportunity.

The court decision would see large internet providers continue to enjoy certain benefits that insulated them from the threat of popular city-owned broadband operators such as the Electric Power Board (EPB) of Chattanooga, Tennessee, and the city of Wilson, North Carolina.

EPB offered residents of Chattanooga access to download speeds of 1 Gbps at rates of about $70 a month. The public utility had received repeated requests for expansion of the service from people outside the EPB's service area, according to Wednesday's ruling from the US Court of Appeals for the Sixth Circuit.

However, due to a geographic restriction put in place by the Tennessee state legislature, EPB was prohibited by law from reaching more customers.

The court ruling meant EPB would not be able to extend its fibre optic telecom services outside of its 600-square-mile service territory in the Chattanooga area unless state lawmakers modified the territorial limits put on EPB and other municipal power utilities in 1999.

According to commentators, the decision was a win for private-sector providers of broadband internet, who had complained about having to compete with government-owned utilities entering the service territories.

However, according to EPB president David Wade, the ruling underscored the need for Tennessee lawmakers to develop a better way to expand high-speed broadband, which according to a recent study was not available to an estimated 834,545 Tennesseans, or nearly one of every eight residents in the state.