A major factor affecting the deployment of municipal networks is the legislative and regulatory regime in place.  In most countries, there are varying degrees of restrictions placed on local Governments from engaging in the provision of telecommunications services.  Much of this stems from the opposition of incumbent carriers and cable companies that are concerned over the impact on their business from competing local access networks. 

The U.S. represents one of the more challenging jurisdictions from the perspective of varying legislative approaches taken across the country.  As a result of the division of powers between the National and State Governments, the U.S. states have the right to enact legislation relating to the entry of local Governments into the provision of telecommunications services.  To date, 15 states have enacted legislation that either prohibits or severely restricts local Governments from providing telecommunications services, and others are considering similar restrictions. From an operational level, the provision of telephony and cable television services are subject to varying degrees of local, state and federal regulation, which have to be considered.

In the case of the European Union, each National Government has its own legislative and regulatory system in place, but this is subject to oversight and direction by the European Union.  Although there appears to be no specific legislative restriction on the deployment of telecommunications networks by local Governments, there are state aid rules that may impact the deployment of networks using public funds, where existing private networks already exist.