FCC Adopts Rules to Eliminate ‘Digital Discrimination’ for Communities with Poor Internet Access

At its regularly scheduled Open Meeting on November 15^th, the Federal Communications Commission (FCC) voted 3-2 along party lines to adopt sweeping regulations at eliminating discrimination in access to internet services. In some corners, this move is being hailed as a significant step, marking the first major U.S. digital civil rights policy. In others, it is being lambasted as an unlawful power grab and one more sign that the government’s end game is taking control over the Internet and broadband service providers from the free market.

Overview of FCC’s New Rules: The comprehensive rules package ratified by the FCC empowers the agency to review and investigate instances of discrimination by broadband providers. The rules cover discrimination based on factors such as income, race, ethnicity, and other protected classes.

The order provides a framework for the FCC to address a range of digital inequities, including disparities in service investment for different neighborhoods and the “digital divide” resulting from regional or socioeconomic inequality. FCC Chair, Jessica Rosenworcel, highlighted that the digital divide disproportionately affects communities of color, lower-income areas, and rural regions. Poorer and less diverse neighborhoods have historically experienced lower investment in broadband infrastructure and less favorable internet service deals. The new rules aim to bring the nation closer to ensuring universal internet access.

Key Points:

1. Consumer Protection: The FCC can directly address companies’ policies and practices that differentially impact consumers’ access to broadband services. Protections are applied to ensure equitable broadband deployment, network upgrades, and maintenance in communities.
2. Investigation and Enforcement: The FCC can investigate instances of discrimination, collaborate with companies to resolve issues, facilitate mediation, and penalize companies for violating the rules.
3. Consumer Complaint Process: A revamped consumer complaint portal will enable the FCC to review complaints of digital discrimination and assess trends in complaint patterns monthly.
4. Model Policies and Best Practices: The FCC has adopted model policies and best practices to support state, local, and Tribal governments in combating digital discrimination.

Legal Background: The rules are a response to the Bipartisan Infrastructure Law Section (60506 of the 2021 Infrastructure Investment and Jobs Act (IIJA)), signed into law in November 2021, which mandated the FCC to adopt rules by November 15, 2023, to “prevent” and identify steps to “eliminate” digital discrimination. The FCC, through its Task Force to Prevent Digital Discrimination, incorporated input from impacted communities in the rulemaking process.

Intent vs. Effect: The FCC recognizes discriminatory intent and effects, aiming to curtail business conduct motivated by discrimination and addressing policies and practices that lead to inequitable outcomes.

Balanced Approach: While the FCC is directed to “prevent” and “eliminate” digital discrimination, it remains committed to fairness and reasonableness. The agency will consider genuine reasons of technical and economic feasibility on a case-by-case basis.

Reception and Criticism: The FCC’s new rules have garnered support for addressing disparities in broadband coverage but also faced criticism for potential overreach.

Industry Opposition: The FCC’s new rules, seeking to streamline the reporting process for such issues, face opposition from the telecommunications industry. Industry representatives argue that the policy may impede investment and view the rules as potentially unlawful. They claim the FCC is seeking expansive new authority over the broadband marketplace.

Public Response: While the telecommunications industry opposes the rules, digital advocacy groups like Free Press Action applaud the FCC’s efforts. They call for additional measures, including the reclassification of certain broadband aspects to enhance oversight powers.

Potential Legal Challenges: Section 60506 of the IIJA mandated the FCC to adopt rules preventing discrimination in broadband internet access deployment based on various characteristics. Chairwoman Rosenworcel outlined that the rules would encompass both disparate treatment and disparate impact, yet this approach may conflict with U.S. Supreme Court precedent on disparate-impact analysis. The potential legal challenges could center around whether the FCC has clear authority under the statute to adopt rules with such a broad interpretation.

• Major Questions Doctrine and Chevron Analysis: The so-called “major questions” doctrine may come into play, affecting how courts interpret congressional delegations of authority to federal agencies. Courts could scrutinize whether Congress clearly intended the FCC to use a disparate-impact standard. Moreover, under the Chevron analysis, an agency’s interpretation of a statute doesn’t receive deference unless there is ambiguity in the enabling statute. Section 60506, as per precedent, may not appear ambiguous in calling for a disparate-treatment standard.
• Technical and Economic Feasibility Considerations: The IIJA requires the FCC to consider technical and economic feasibility when crafting digital-discrimination rules. Profitable broadband projects depend on various factors, such as population density, terrain, regulations, taxes, and consumer adoption. These factors are correlated with characteristics protected under the IIJA. A disparate-impact standard might incorrectly label deployment decisions based on purely economic factors as improper discrimination, leading to potential challenges.
• The Income Conundrum: The inclusion of income level as a protected class introduces complexities. Income is highly correlated with various protected and unprotected characteristics, leading to a higher likelihood of false positives in evaluating income-based discrimination claims, especially under a disparate-impact standard. Failure to recognize this “income conundrum” in digital-discrimination rules could result in unnecessary litigation where no discrimination exists or where economic feasibility should be considered.
• Concerns Regarding Rate Regulation: While the FCC has denied explicit intentions of imposing direct rate regulation on broadband-internet providers, the National Telecommunications and Information Administration (NTIA) has expressed the importance of addressing pricing to prevent digital discrimination. Attempts to impose rate regulation under Section 60506 language could face legal challenges under the major questions doctrine and Chevron analysis.

Conclusion: As the FCC moves forward with the proposed rules, it is essential to remain vigilant about potential legal challenges and the broader implications of adopting a disparate-impact standard. We will keep you updated on any significant developments in this matter.

If you have any specific concerns or questions, please feel free to reach out to the attorney assigned to your account, or in the alternative, contact Michael P. Donahue at mpd@commlawgroup.com.