Understanding Your State’s Laws About Municipally Owned Telecommunications Utilities

Of course, let’s start with a disclaimer: we are engineers, not lawyers, and this is not legal advice. So, though we aren’t lawyers, we do know people who are, and some of them have made resources that are helpful to understanding state law as it pertains to municipal telecommunications utilities. Before we get into the various resources, though, let’s focus a moment on what you don’t need to know.

A member of the general public, an elected official, or someone serving on a municipal electric board doesn’t need to understand all aspects of a potential project. Successfully constructing a municipal utility will eventually involve many professionals, including law firms specializing in communications law, and financing organizations focused on municipal bonds and other forms of public financing.

FARR Technologies is an engineering firm providing detailed plans and specifications along with feasibility studies and Pro-forma financial projections. Other firms in the industry specialize in marketing, after-hours customer service, on-site services…..the list goes on and on.

Knowing there are specialists to rely on can help community members out of the weeds and focused on the broad details of the project. Unfortunately, one of the first broad topics is whether your state will allow the formation of a municipal telecommunications utility.

Many states have legal restrictions on the construction and operation of municipal telecommunications utilities. In some states, the restrictions are minimal. Iowa, for instance, requires a successful referendum establishing the formation of a local telecommunications utility. After a successful vote is held on the referendum, the remaining hurdles center on financing and public support for construction.

Missouri, by contrast, prohibits municipalities from engaging in telecommunications services except for internal use, like education, healthcare, and emergency purposes. The remaining states vary from highly restrictive to minimally so. Each state, however, will regulate municipal utilities in general, and have specific requirements for telecommunications.

The most widely accessed information on the internet inaccurately suggests significant restrictions in a majority of states. A more accurate and updated list is available on the website of the communications law firm Baller, Stokes & Lide. Their report, State Barriers to Telecommunications Initiatives, lists the various state requirements in states that have created barriers to forming a municipal communications utility.

Another great resource at the Pew Trust website is the “state broadband policy explorer.” It contains more detailed explanations and state statutes that relate to broadband. The content at PEW is also updated frequently to reflect changes.

Your state probably has an organization devoted to the issues of municipal utilities in general, and some of those organizations have programs or offices devoted to broadband utilities. The American Public Power Association includes on its website a list of member organizations, including state associations of public utilities.

Today there are hundreds of municipal telecommunications utilities operated in the U.S. Unless your state is one of the few with highly restrictive laws, you can create one for your community too.