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Former FCC commissioner weighs in as states challenge agency on net neutrality

    • Federal Communications Commission and state regulators have a history of tension between them

    • The FCC has the legal authority to pre-empt states and localities, but that authority is not unlimited

    • Congress, rather than state governments or the FCC, may be best positioned to create a lasting net neutrality framework

After the Federal Communications Commission voted at the end of 2017 to eliminate its net neutrality rules — which prohibited internet service providers from blocking or throttling legal web traffic — more than two dozen states moved to implement their own protections. But as part of the FCC's order, the commission included language pre-empting states from passing their own measures.

With a legal battle brewing between the federal agency and state governments, S&P Global Market Intelligence spoke with Cooley LLP partner Robert McDowell, who served as a Republican commissioner on the FCC between 2006 and 2013, about his perspective on the balance of power between state and federal regulators and the larger issue of net neutrality. What follows is an edited transcript of that conversation.

S&P Global Market Intelligence: The relationship between the federal government and states and localities is at a really interesting moment. How do you see the relationship between the FCC and state or local officials evolving?

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Cooley LLP partner Robert

Source: Cooley LLP

Robert McDowell: There has always been a tension between the FCC and the states, and that's just inherent in the construct of the FCC because it's federal in nature with federal powers and it has pre-emptive authority. You can go back to the telephone. Almost every state has a public utility commission that regulates intrastate electricity and power, but also the intrastate telephone business for calls that originate and terminate within a state's borders. So since the Communications Act of 1934, which established the Federal Communications Commission, that's always created a tension between what is the domain of the FCC versus what is the domain of the state.

I've worked a lot on these issues. In particular, after the 1996 Telecommunications Act, which tried to promote competition, the state public utility commissions wanted their own domain and more authority, and the Democrat-led FCC under President Bill Clinton moved to sort of expand its authority to get things done on a national level. And that caused a lot of friction.

While the FCC has pre-emptive authority, that power is not absolute. Can you think of some instances where an FCC pre-emption was either upheld or overturned, illustrating the bounds of that authority?

When I was a commissioner, we had an order that somewhat pre-empted localities — including towns, cities, counties and therefore states — in terms of video franchising. Historically, if you were a cable company, you had to go to the city or town to get permission to be the monopoly cable provider in that area. And at the time, there were new entrants coming in to compete against the incumbents, and we wanted to make it easier for those new competitors to do that without getting gummed up with needlessly long proceedings at the local level. We didn't completely pre-empt localities, but we put in a shot clock and some other things. That was appealed to the appellate courts and we, the FCC, won.

And then in 2010, we voted to pre-empt localities from needlessly delaying the authorization of cell towers and other antennas that were needed for 4G LTE deployment. That had a strong bipartisan vote at the FCC, but it was appealed by the localities, and the FCC won. The localities didn't like having their authority pre-empted.

But then the last case that pops into my mind is the FCC during the second half of the Obama administration voted 3-2 to pre-empt state legislatures. Some municipalities wanted to have city-funded broadband providers, but then some state legislatures passed state laws saying, "No you can't do that." So former Chairman Tom Wheeler led a 3-2 vote at the FCC saying we think it's a good idea for cities or towns to be able to do this, we are going to pre-empt state legislatures from limiting municipal broadband. The state of Tennessee brought an appeal and won, with the court saying the FCC can't subvert the local democratic process in that way.

Net neutrality has a long history and different administrations have sought to implement different frameworks. Some people say the best solution is for Congress to act, while others say Congress is too slow to keep up with this rapidly evolving space. What do you think?

I personally do think Congress needs to step in on net neutrality. As of Feb. 8, the 1996 Telecom Act was 22 years old. And one could argue a lot has happened in that 22 years in the internet space and maybe it's time for a refresh. It would be great if Congress could step away from the politics of all of this — the clickbait, the soundbites, the rhetoric — and just look at what America needs in the internet space to maintain our leadership there. It's hard for investors and entrepreneurs to invest when the rules change so abruptly every two to four to eight years. So this is a matter of good government and good public policy.

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