by CHARLES M. DAVIDSON and MICHAEL J. SANTORELLI – The relationship between federal and state regulators in the U.S. telecommunications space has long been fraught with tension regarding the boundaries of regulatory authority over communications services of all kinds. Unlike with basic services like traditional telephony, however, Congress expressed a clear preference for leaving advanced services like broadband “unfettered” by both state and federal regulation, a preference that for many years was taken literally by the Federal Communications Commission (FCC), resulting in a minimalist approach that prevailed for more than a decade. Though incredibly successful when measured by a range of metrics, federal regulators recently elected to dramatically alter this approach to broadband. This decision has raised many questions about the reach of FCC authority over broadband and whether its sweeping reinterpretation of federal law might have unlocked new state level authority over services once thought to be immune from such piecemeal regulation.
This paper provides a comprehensive analysis of these recent changes and evaluates whether and to what extent state regulators might have authority to regulate elements of broadband service in their states under section 706 of the Telecommunications Act of 1996. The text of this provision, as reinterpreted by the FCC and upheld by federal appeals courts, calls on both the FCC and individual state public utility commissions (PUCs) to encourage the deployment of broadband services by using an array of “regulating methods” to remove barriers to investment. Some have argued that the FCC’s recent decision to reclassify broadband as a telecommunications service subject to common carrier regulation bolsters the case for a more active state role, as this regulatory paradigm was long defined by its dual federal state character. In reality, though, federal statutes, FCC precedent, federal case law, and a range of other factors make clear that any regulatory authority over broadband accruing to the states under section 706 is very narrow, if it exists at all, and subject to a number of limitations, including federal preemption.