Nixon v. Missouri Municipal
Can states bar municipalities from
providing telecom services?
In Nixon v. Missouri Municipal League, decided on March
24, the Supreme Court considered the relative merits of federalism and
free markets. The victory went to federalism. The federal Telecommunications Act
of 1996 does not preempt state laws designed to crush local telecom competition.
The Telecom Act promotes market entry. Under its provisions,
"no state or local statute or regulation... may prohibit or have the effect
of prohibiting the ability of any entity to provide any interstate or intrastate
telecommunications service." Municipals argue that they are
"entities," and thus protected by federal law.
The Supreme Court, in a decision by Justice Souter, disagreed.
Preemption to promote private activity is not the same as preemption that
promotes government-sponsored activity; Congress had no intention to set off on
the latter "uncertain adventure" that would create a "crazy
quilt" of interstate regulations. Municipalities' "generous
conception" of preemption must fall because its not convincing on public
policy grounds (government providers both help--and hinder--competition) and is
not mandated by the Act's language ("entities" is hardly a clear
Good news for states--and the telecom industry, which isn't
particularly fond of local government competition. Bad news for
cities who have made themselves more attractive through telecom initiatives
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