MEDIA ADVISORY: FSF Scholars Submit Ex Parte Regarding the FCC's Digital Discrimination Proceeding

Free State Foundation President Randolph May and Director of Communications Policy Studies Seth Cooper submitted the attached written ex parte presentation to the FCC emphasizing the importance of the agency following Congress’s directive to account for “technical and economic feasibility” in considering alleged complaints of digital discrimination. Below are two paragraphs excerpted from the beginning of the ex parte submission:

In Section 60506(a) of the Infrastructure Investment and Jobs Act of 2021, Congress expressly stated that, in implementing the Commission's mandate to take steps to ensure that all Americans benefit from equal access, the agency must consider issues of “technical and economic feasibility.” Congress thereby dictated that broadband providers must remain free to make informed business judgments regarding matters such as the size of their investments in relation to the availability and cost of capital, the geographic reach of planned deployments by the provider and competitors, the cost of the underlying technologies employed considered for deployment, the timing of new deployments, and other similar considerations. They are all market-related factors affecting economic feasibility assessments.

The congressional requirement that economic feasibility factors be taken into account requires acknowledgement by the Commission that deployment and non-deployment decisions of broadband providers to certain locations routinely, and necessarily, involve business judgements that have absolutely nothing to do with invidious discrimination. When confronted with a complaint alleging discrimination, in addition to the above considerations, “economic feasibility” is properly informed by factors such as: (1) whether a grant-making entity (say, in the BEAD context) delineates the deployment areas that are being subsidized; (2) whether the area subject to question is receiving, or is slated to receive, federal or state subsidized build-outs; (3) whether another provider is already providing service, or is slated to offer service, at comparable speeds and with comparable quality of service metrics; (4) regulatory or procedural requirements that increase costs prohibitively; and (5) whether the provider does not provide service in the complainant’s area using the technology the complainant prefers. As explained in FSF’s comments and reply comments, when broadband providers make deployment decisions based on economic feasibility reasons such as those above, the Act forbids the Commission from treating those decisions as wrongful.

Video and Audio Available for Webinar on FCC's Digital Discrimination Rulemaking

On June 23, the Federalist Society hosted a webinar titled "The FCC's Digital Discrimination Rulemaking: Facilitating Equal Access to Broadband Services." Video and audio of the event are now available for streaming and download:

Free State Foundation President Randolph May moderated the discussion amongst panel participants Harold Feld of Public Knowledge, Clint Odom of T-Mobile, and myself. The webinar included discussion of the FCC's authority under Section 60506 of the Infrastructure Investment and Jobs Act of 2021. Does Section 60506 confer authority on the agency to adopt rules that would impose liability on broadband providers based only on a showing of unintentional disparate impact? Or does the statute require evidence of intentional discrimination. And what effect might disparate impact liability have on efforts to ensure equal access to broadband Internet services? Check out the online video or listen to the podcast to hear thoughtful insights on these and related matters. 

 

In public comments and reply comments filed with the FCC in its digital discrimination rulemaking proceeding, FSF President Randy May and I concluded that Section 60506 of the Infrastructure Act contains an intent-based standard for rules prohibiting digital discrimination, and that the text of statute does not support the imposition of unintentional disparate impact liability on broadband Internet service providers. During the webinar event, I emphasized that Section 60506 contains specific language that calls for an intent-based anti-discrimination rules and that the statute does not contain hallmark catchall terms that courts have identified as authorizing or permitting unintentional disparate impact claims. For discussion about that issue more, check out the webinar.

Register Now: The FCC's Digital Discrimination Rulemaking: Facilitating Equal Access to Broadband Services

On Friday, June 23 at Noon Eastern Standard Time, the Federalist Society will be hosting a webinar titled "The FCC's Digital Discrimination Rulemaking: Facilitating Equal Access to Broadband Services." Registration for the virtual event is now open.

The webinar will be moderated by Free State Foundation President Randolph May, and it will feature a panel that includes Dr. Harold Feld of Public Knowledge, Clint Odom of T-Mobile and Seth Cooper of the Free State Foundation. The Federalist Society's webpage for the event describes what will be in store for the webinar: 

The Infrastructure Investment and Jobs Act, signed into law on November 15, 2021, requires the Federal Communications Commission (FCC), within two years, to promulgate rules to facilitate equal access to broadband internet services and to prevent "digital discrimination of access based on income level, race, ethnicity, color, religion, or national origin." Significantly, the statute also requires that the rules take into account "issues of technical and economic feasibility." The FCC issued a notice of proposed rulemaking on December 22, 2022, and comments and reply comments have now been submitted.

 

Given the importance of widespread access to broadband services, the "Digital Discrimination" proceeding is one of the most important items on the FCC's agenda. The panelists, from a diversity of perspectives, will discuss key legal and policy issues presented in the rulemaking, including the following: Does the agency have authority to adopt rules that would impose liability on broadband providers based only on a showing of unintentional disparate impact or is evidence of intentional discrimination required? In considering liability, how should the agency take into account claims relating to the technical and economic feasibility of making available access? What impact will the rules have on investment and innovation under various scenarios? What type of process should the Commission employ in considering complaints of digital discrimination?

 

Please join the panel of experts for a lively discussion of these and other questions as the FCC prepares to adopt final rules in the digital discrimination proceeding.

Be sure to register for this timely event online.

FSF Submits Reply Comments in the FCC's Digital Discrimination Proceeding

The Free State Foundation submitted reply comments today in the FCC’s important Digital Discrimination proceeding. The complete reply comments, with all footnotes, is available at FSF's website:

These reply comments are submitted in response to the Commission's proposed rulemaking to address digital discrimination of access to broadband Internet access service. In these reply comments, we again urge the Commission to adopt an intent-based definition of digital discrimination because it is consistent with the text of Section 60506 of the Infrastructure Investment and Jobs Act. These reply comments emphasize that the record in this proceeding does not support the claims made in some comments that there is systemic digital discrimination in America. Also, in the context of responding to other parties, these reply comments identify requirements that should be satisfied before the Commission can impose liability on broadband Internet service providers (ISPs), as well as identifying limits on the scope of the Commission's rules and their enforcement.

 

Claims made in certain comments that there is clear evidence of pervasive digital discrimination rely on largely the same handful of studies that have significant limitations and defects, including reliance on outdated deployment data and a myopic focus on a particular ISP's footprint within a geographic area while ignoring that residents in the footprint are served by a competing provider offering comparable service. Moreover, purported low adoption rates do not constitute evidence of digital discrimination as consumers have many reasons for not adopting broadband – such as concerns about privacy, security, lack of a PC, and other personal considerations – that are outside the control of ISPs.

 

Instead of relying on faulty and outdated studies claimed to prove that digital discrimination of access is pervasive, current data based on accurate maps should be required for the Commission's adjudication of any digital discrimination complaint. And no finding of liability should be made absent the availability of accurate current data regarding existing broadband deployments.

 

Additionally, it would be wrong to find an ISP liable for digital discrimination of access if residents of the area already have access to one or more other broadband providers offering comparable services, and the Commission's rules should not recognize liability in such circumstances. The underlying purpose of Section 60506 is to ensure equal access, not to try to find back door traps to mandate fiber overbuilds. New entrants into the broadband market face financial risks in going head-to-head with incumbents. Rules that ignore the presence of already available services and high adoption rates would unreasonably expand the basis for liability and make entry even more financially risky for providers seeking to expand into new geographic areas. This would have the perverse effect of curtailing deployment.

 

The Commission should recognize that an available service is comparable whenever it can reliably support online edge services and applications that have relatively wide use among consumers. The rules should embody the principle of technological neutrality. So long as alternative platforms can meet speed and latency benchmarks, they should be deemed to be comparable services.

 

Importantly, there is research evidence that the presence of a local government-owned broadband network deters network investment and deployment by private market providers, and there should be a "safe harbor" from liability when an ISP's non-deployment decision is based on a refusal to overbuild and compete against a government-owned network.

 

Notably, there are a variety of instances in which laws and regulations control the deployment decisions of ISPs. Aside from any direct strings attached to the expenditure of federal and state subsidies which have the effect of dictating deployment decisions beyond ISPs' control, state and localities will continue to exercise authority to approve, limit, or prohibit the construction of new facilities and upgrades to existing ones. Accordingly, ISPs should enjoy a "safe harbor" from any liability when their deployments are made pursuant to federal or state subsidy awards. And ISPs should receive safe harbor when actions by federal, state, or local governments regarding permit or other approval processes have prohibited, limited, or delayed infrastructure construction and upgrades.

 

Similarly, ISPs should receive safe harbor from liability when they can show they were denied access to utility poles or that pole owners delayed approval of attachments or pole upgrades necessary for new attachments. And ISPs should be permitted to proffer evidence showing the technological and/or economical infeasibility of deploying to a given area due to the high cost of attachments, particularly where attachments would be needed for high numbers of poles.

 

The Commission's authority under Section 60506 almost certainly will be limited by the major questions doctrine. As explained in West Virginia v. EPA (2023), the major questions doctrine holds that there are certain "extraordinary cases" involving decisions of such "political and economic significance" that a "clear congressional authorization" by Congress is required in order for the agency to exercise the powers that it claims. The broader the extent to which the Commission's rules seek to impose liability on ISPs and the more onerous the restrictions and obligations they impose – particularly if the agency adopts a disparate impact definition and imposes pervasive restrictions and obligations on ISPs' deployment practices that effectively constitute unfunded buildout mandates and price controls – the more likely it is that such rules would be deemed unlawful under the major questions doctrine.

(P.S. FSF's initial comments to the FCC in its Digital Discrimination proceeding were filed on February 21, 2023, and they are available online.)

FSF Perspectives on How the FCC Should Define and Address Digital Discrimination

On December 22, the FCC released its notice of proposed rulemaking to combat digital discrimination. Free State Foundation President Randolph May and I offered our reaction to the Commission's notice in a December 21 press release. Additionally, our views regarding the proper interpretation of the statutory definition of "digital discrimination" and policy that will best help to close the digital divide and ensure equitable access to broadband Internet services are expressed our October 14 Perspectives from FSF Scholars, "The FCC Should Reject a Disparate Impact Standard: Targeted Subsidies Should Be Used to Address Deployment Gaps." As we wrote in the
introduction: 

To date, there is no evidence of intentional discrimination in broadband deployment on account of income, race, or ethnicity. Nonetheless, debate has arisen over whether the Commission's rules should go beyond preventing intentional discrimination to impose liability on broadband Internet service providers (ISPs) on the basis of disparate impact – that is, on the basis of practices that are acknowledged to be nondiscriminatory on their face, but which are claimed to result in adverse effects on legally protected groups. 

The Commission should follow Congress's instructions in the Infrastructure Investment and Jobs Act of 2021 by barring intentional discrimination. To the extent that there are, in fact, any areas disparately impacted by broadband deployments or practices, whether unintended or beyond ISPs' control, Congress and the Commission ought to subsidize, on a targeted basis, buildouts to ensure equal access and take other properly targeted remedial measures that will accelerate broadband deployment to all Americans.

President May and I also offered our views regarding the makeup of the Commission's forthcoming anti-discriminatory model policies and best practices for state and local governments in in our November 30 Perspectives from FSF Scholars, "FCC Should Rely on Pro-Deployment Actions to Avoid Digital Discrimination":

[T]he FCC should decline to include disparate impact liability in any model policies, best practices, or rules that it develops. Instead, the Commission should focus proactively on ways for state and local governments, ISPs, and local communities to identify unserved or underserved areas and help get them connected. And the Commission should recommend that states and local governments accelerate deployment, including by reducing permit approval time lags as well as by eliminating any other procedural impediments to constructing broadband infrastructure. 

Both Perspectives papers go into more detail regarding recommended next steps for the Commission. Expect FSF scholars to further address the Commission's proposed rules regarding digital discrimination in 2023.  

Press Release: FCC's Digital Discrimination Proceeding

 

Free State Foundation President Randolph May and Director of Policy Studies Seth Cooper issued the following statement regarding the FCC’s adoption of a Notice of Proposed Rulemaking in its Digital Discrimination proceeding:

“There is no disagreement that there should be equal access to broadband for all the people of the United States and that digital discrimination should be prevented. But it is unnecessary, and likely to be counterproductive to achievement of that worthy objective, for the Commission to adopt a rule which allows discrimination to be proved based on a showing of unintentional 'disparate impact' rather than on a showing of intentional discrimination. And it is likely that a rule adopting a ‘disparate impact’ test wouldn’t survive a judicial challenge because the text and structure of the Infrastructure Act, along with relevant judicial precedents, require an intent-based definitional standard to prove digital discrimination.”