A Look Inside the FCC’s Digital Discrimination Proceeding

March 14, 2023 | Tucked inside the massive Infrastructure Act, which appropriated billions in subsidies to address broadband deployment, is a handful of paragraphs giving the FCC a new mandate on “digital discrimination.” Section 60506 directs the FCC to facilitate “equal access” to broadband in all communities and gives the FCC two years to adopt rules to prevent “digital discrimination of access” based on certain protected characteristics, such as race, income and/or ethnicity.

This section was an eleventh-hour addition to the huge Infrastructure package and it received little scrutiny or debate before being enacted. As a result, it contains only vague definitions of the relevant terms, thus leaving the FCC to grapple with the question of how to implement this broad new language.

Last December, the FCC adopted a Notice of Proposed Rulemaking seeking wide-ranging comment on ways in which it could gather data about specifically alleged discrimination toward historically marginalized communities and establish a new policy framework to promote equal access for all Americans. Over 700 comments were filed in the opening round last week.

Given the broad nature of the inquiry underway, some advocacy groups are promoting aggressive readings of the statute that could drive substantial new regulatory requirements into the broadband space. For example, some have urged the Commission to define “digital discrimination” as any time one community, or even one address, has better broadband service than another. The logical conclusion of such an approach would be a policy requiring a provider who deploys high-speed broadband anywhere to deploy it everywhere — clearly an untenable result. Such a rule, for example, could prevent new entrants like Google Fiber from identifying and selectively deploying in specific geographies.

This approach also ignores the specific caveats that Congress included in Section 60506, namely that any inquiry into allegations of discrimination must take into consideration technical and economic feasibility. Providers that are required to routinely make capital decisions around fiber deployment will no doubt ensure that the record contains a robust discussion of the many factors that drive deployment decisions, including household density, occupancy rates and the presence of other fiber and/or cable broadband providers in the target market. And given the broader goals of the Infrastructure Act — namely creating incentives for broadband providers to deploy broadband in unserved areas — it would be counter-productive for the Commission to adopt pervasive new regulatory requirements that could create substantial regulatory uncertainty around deployment decisions.

That being said, the debate will be loud, particularly on some of the thornier issues raised by the NPRM, including the question of what legal standard should apply to any discrimination inquiry. More specifically, the record is already divided on the question of whether ISP broadband decisions should be assessed through a disparate impact lens or, alternatively, require a finding of intentional discrimination. Broadband providers have argued that the language in the legislation, bolstered by decades of federal precedent, make clear that the FCC cannot find that a broadband provider has engaged in discrimination without a specific finding of discriminatory intent — i.e., a decision not to build in or serve a specific geographic area based on a protected characteristic of the consumers in that area.

On the other side of the debate, some advocates have argued that the FCC can find digital discrimination if a low income or minority area lacks broadband, even if there is no evidence of discriminatory intent. In this formulation, disparate impact alone would be a sufficient evidentiary basis to prompt an inquiry into broadband discrimination. Theoretically, under this approach, a complaint alleging disparate impact would shift the burden to the respondents to explain and justify their decision-making.

It is unclear how this theory would be applied to the dynamic fiber market that exists today. There are dozens of fiber over-builders making daily fiber deployment decisions — from incumbents who are upgrading outdated copper networks to well-financed new entrants like Google Fiber to much smaller local players who tend to focus their deployments in select local areas, like Metronet, Greenlight Networks, GoNetSpeed and IQ Fiber. Each of these players are regularly making deployment decisions that will inevitably impact various communities differently, yet all are engaged in precisely the type of broadband deployment activity that the Infrastructure Act seeks to foster. The FCC will be required in this proceeding to navigate through the regulatory debate in a way that will not chill or discourage these ongoing fiber investments.

Another debate is forming over whether the statutory language extends only to deployment questions or whether it also covers differences in broadband rates and other terms. Some advocates are arguing that the language gives the FCC authority to remedy discriminatory harms in the marketing for or the offered terms and conditions of an already-deployed broadband product. This argument specifically targets the scenario where an ISP sets different prices or conditions on broadband service in areas that lack competitive alternatives and clearly raises the specter of broadband rate regulation.

Other issues teed up for comment in the proceeding include:

• Whether the FCC should revise its consumer complaint process to create a dedicated path to gather information on allegations of digital discrimination;
• Whether and how the FCC would enforce a broad prohibition on digital discrimination, including whether to establish a structured process to adjudicate formal complaints;
• Whether the FCC should place affirmative obligations on providers to address digital discrimination in their deployment planning, including using Commission data to formulate plans;
• What guidelines should be adopted for states and localities as best practices to prevent digital discrimination and promote digital equity.

With a fall statutory deadline for final rules in the proceeding, expect the regulatory skirmishes on these issues to reach a boil this summer, all while the Commerce Department and NTIA continue their herculean efforts to move forward on the allocation of billions of dollars of subsidy to support broadband deployment.

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