Netflix is siding with local governments that want to provide high-speed Internet service to their residents.
In a filing to the Federal Communications Commission made public Tuesday, Netflix argued that cities should be allowed to build their own networks—especially in areas overlooked by commercial providers. Municipal broadband can spur competition, meaning faster connections for residents, the company argued.
Those faster connections could allow more people to pay for Netflix's video-streaming service.
"A local government that decides it is in its community's interest to invest in an essential service such as high-speed broadband Internet access should not be considered any more unusual than a government investing in providing an electric-utility service, public transportation, or any essential service that benefits a community," Netflix wrote in the filing.
Telecom and cable companies have been lobbying state lawmakers around the country to set up restrictions on municipal broadband. FCC Chairman Tom Wheeler indicated earlier this year that he would consider striking down those state restrictions.
The cities of Chattanooga, Tenn., and Wilson, N.C., both filed petitions asking the FCC to overturn their states' broadband laws so they can expand their existing municipal networks.
In its filing supporting the petitions, Netflix argued that the FCC has the authority to preempt the state restrictions under a federal law that directs the agency to promote the deployment of broadband.
The company argued the FCC should use that power to prevent Internet providers from stifling competition.
"State laws that prevent municipalities from providing their citizens faster, cheaper broadband service—or prevent the extension of that service to citizens in unserved or underserved areas—harm the entire Internet along with those citizens," Netflix wrote.
But industry groups are warning the FCC not to intervene against the state laws. In filings, AT&T and the U.S. Telecom Association (which represents AT&T, Verizon, CenturyLink, and others) argued that government networks can discourage private-sector investment.
Rather than supporting government-backed competitors, the FCC should focus on funneling more subsidies to private providers, the companies wrote.
"A policy agenda that encourages private-sector investment, while using targeted subsidies to spur broadband deployment and increase broadband adoption, not only makes great sense but also comports with an overarching goal of the 1996 [Telecommunications] Act," AT&T wrote.
The National Governors Association and the National Conference of State Legislatures also filed comments claiming the FCC lacks the legal authority to act. The groups noted that some local Internet projects have been expensive failures, and argued it's reasonable for state lawmakers to try to protect taxpayer money.
But Netflix and other supporters of FCC action argue that there are plenty of examples of successful municipal broadband projects that pay back taxpayers and boost economic growth. Supporters point to Chattanooga and Wilson, which both deliver Internet speeds about 50 times faster than the national average, as poster children for municipal broadband.