17 states legally block municipalities from building their own fiber networks
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Seventeen US states have preemption laws that prohibit or severely restrict municipalities from building and operating publicly-owned broadband networks. In practice, this means that when an incumbent ISP refuses to serve a rural town (because the economics don't justify private investment), the town itself is legally barred from solving its own problem. So what? The federal Infrastructure Investment and Jobs Act explicitly requires state BEAD plans to 'ensure the participation of non-traditional broadband providers such as municipalities, cooperatives, and nonprofits,' but state preemption laws directly contradict this federal mandate. Towns that could build fiber for $1,200-$1,800 per passing using municipal bonding (cheaper capital than private equity) are locked out by state legislatures that received lobbying from incumbent ISPs. The structural reason this persists is that incumbent ISPs spend millions on state-level lobbying to maintain monopoly positions -- they don't want to serve these areas, but they also don't want anyone else to, because a successful municipal network in one town creates political pressure in the next.
Evidence
BroadbandNow report: 16 states maintain broadband roadblocks (updated from earlier count of 19). ILSR tracked 17 states with preemption as of 2024. Minnesota repealed its preemption law in May 2024. Colorado rolled back referendum requirement in 2023. IIJA Section 60102(h)(1)(C)(vi) requires state plans to ensure participation of non-traditional providers. Source: broadbandnow.com/report/municipal-broadband-roadblocks