The Federal Communications Commission (FCC) has claimed that it has the authority to nullify state laws in Tennessee and North Carolina that would prevent municipalities from creating their own broadband services if they “restrict competition.”

At issue are laws that are preventing the cities of Chattanooga, TN and Wilson, NC from building broadband networks that would compete with networks operated by private-sector companies. You can probably guess who supports these laws and opposes the FCC. Companies like Netflix are calling on the FCC to exercise its power:

The cities of Chattanooga, Tenn., and Wilson, N.C. — which have asked the FCC to invalidate state laws preventing their government-run Web services from expanding — “should not be hamstrung by state laws enacted at the urging of incumbent broadband providers seeking to maintain market dominance,” Netflix added.

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Public interest groups have urged the agency to go ahead, but Web providers, the National Governors Association and some Republicans in Congress have warned it to back off.

Interfering with state laws would be a federal overreach, critics say, and regulators ought to respect the will of the states.

Let me get this straight: it would be “federal overreach” for the FCC to nullify state laws, but it’s okay for state laws to nullify municipal actions? Once again, business interests define “federal overreach” solely as things they don’t like.

What exactly is the problem with the two cities’ plans, anyway? They don’t appear to be placing any additional regulatory restrictions on the private broadband players. They’re just trying to enter the market—the free market, as I recall it being called. If government is so incompetent at everything it does, this should not be a threat to the private companies. Which is why the fact that they are obviously so terrified of a “public option” (see what I did there?) is so interesting.

You can submit comments to the FCC here and here.