Learning from History
Commentary by Steve Effros
In 1972 and 1973 I chaired the FCC’s Cable Television Federal, State/Local Advisory Committee on Regulatory Relationships. It was created as part of the Commission’s adoption of the first set of federal rules for cable. The mandate was to look at the complicated and often contentious cross-currents between federal, state and local regulation of the newly emerging industry. The problem was clear; overregulation. Three different levels of government were all getting involved in setting rules. Who should do what?
The committee was made up of serious heavyweights from all sides. The cable industry had folks like Amos Hostetter (CEO/Continental), Gus Hauser (CEO/Warner) and Bill Daniels on the panel. The cities weighed in with then City Attorney (and subsequently Mayor) of San Diego John Witt, and New York City’s famed franchise director Morris Tarshis. The states had folks like DC attorney Roland Homet representing Illinois, and Rhode Island’s Public Utility Czar Archie Smith at the table. Everyone seemed to understand that this committee was being asked to advise the Commission on how to deal with divvying up the regulatory responsibilities for what was generally recognized by then as an industry that was going to become a primary provider of telecommunications in the country.
The idea was to help refine the original set of rules, particularly in areas such as franchise requirements, public access and the like, as well as recommend to the Commission how to appropriately define regulatory jurisdictions. The industry was used to dealing with the cities, and preferred a single federal regulatory approach. The states were slowly getting involved with public utility regulation or additional oversight of the cities. The cities didn’t like that, and wanted to keep as much local power over the streets and ways as they could. That was the primary hook they had for regulation at all.
After over 250 challenging hours of meetings, both a Majority and Minority report were delivered to the Commission. The Majority recommended primarily federal preemption. The Minority said there were a lot of inherently state/local matters involved, and the feds should stay out of them. The Commission then issued an inquiry about what it should do, as well as publishing a “Clarification” of the rules setting out the middle course of what it called “Creative Federalism,” with the FCC setting, in essence, standards, and the states/cities continuing their respective roles.
The Commission decided not to get in the middle of a fight between states and cities about who did what at that level, recognizing that the cities are political subdivisions of the state. The Commission said: “…internal regulatory allocations within a State… (are) not subject to our jurisdiction.”
So here we are today. For what I would characterize as “industrial policy” reasons, some folks want any city they can get to start building their own fiber system. The industry opposes having to “compete” with a tax-subsidized entity that is also regulating them at the same time. Some states have seen the multiple municipal ownership failures and bankruptcies and have agreed that it’s not a good idea. But the same folks who want to call broadband a public utility (if it was, it would inevitably go to state PUC regulation) also want local muni builds, and the FCC is now investigating the idea that it can somehow override a state’s control of its own entities, the cities, and preempt any state prohibition of municipal broadband ownership!
This is an invitation to a lawsuit the Commission will lose, and it said so 40 years ago.