FCC to Vote on Digital Discrimination Rules

• On November 15, 2023—the statutory deadline—the Federal Communications Commission (FCC) will vote on rules to prevent so-called “digital discrimination,” i.e., discrimination in access to broadband services.
• The proposed rules stem from provisions in the Infrastructure Investment and Jobs Act (IIJA) that require the FCC to create rules that ensure equal access to broadband services for all Americans.
• Most significantly, the draft rules define digital discrimination to include both practices that intentionally discriminate against specific communities and practices that may be facially neutral but create discriminatory impacts regardless of intent. In the absence of material changes to the draft text, which is unlikely, the proposed rules will likely result in another party-line vote among the three Democratic Commissioners (in favor) and the two Republican Commissioners (opposed). Significant broadband industry pushback and legal challenges to the framework are also likely to follow.

Background on the Proposal

On October 24, 2023, the FCC (or "Commission") announced that it will vote on new rules to prevent discrimination in the provision of broadband access at its Open Commission Meeting on November 15. The rules, if adopted, would seek to address discrimination based on income level, race, ethnicity, color, religion and national origin. The impetus for the proposed rules is the IIJA, which requires the FCC to make necessary regulatory changes by November 15, 2023 to ensure that all Americans can access quality broadband services without discrimination.

The draft order represents a major milestone in what has been a lengthy regulatory process, beginning with the release of a Notice of Inquiry (NOI) in March 2022, followed by a Notice of Proposed Rulemaking (NPRM) in December 2022. The Commission’s Task Force to Prevent Digital Discrimination also held eight listening sessions, during which it heard from impacted communities and gathered input on the proposals set forth in the NPRM.

The Need for the Rules

In recent remarks, FCC Chairwoman Jessica Rosenworcel referred to what she terms “electronic redlining”—a practice in which the deployment of new technologies overlooks minority and low-income communities. According to Chairwoman Rosenworcel, this “electronic redlining” has widened the digital divide as technology continues to advance at breakneck speeds. The draft order contends that, in formulating the proposed rules, the Commission carefully reviewed the history of this problem, arguing that many of the minority and low-income communities that have suffered from housing segregation and redlining are the same communities that lack sufficient access to broadband services. The draft order further contends that tracking the causes of such discrimination is difficult, arguing that much of the disparate impact to the detriment of such communities comes from policies that appear neutral on their face and do not evince facially-discriminatory intent.

The Biden administration has stated that addressing the digital divide is a major priority, particularly in the aftermath of the COVID-19 pandemic, which the draft order argues further exacerbated growing inequalities related to digital access. In November 2021, Congress adopted and President Biden signed into law the IIJA, which includes Section 60506 on digital discrimination that requires the FCC to adopt new rules aimed at preventing and eliminating digital discrimination, with the ultimate goal of ensuring that all Americans benefit from equitable access to broadband service. This mandate obligates the FCC to enact rules that target the digital divide and “facilitate equal access to broadband” in a manner that considers issues of technical and economic feasibility for broadband service providers and other industry players.

Defining Digital Discrimination

A key consideration for the Commission in formulating the new rules was how broadly to define “digital discrimination,” and specifically whether to define the term to include only those policies and practices that reflect a discriminatory intent or to also include those practices that result in a disparate impact to unserved and underserved communities despite the lack of any specific evidence of discriminatory intent. The Commission held listening sessions in various regions of the country at which it solicited feedback from impacted communities on how to define the term in a way that would effectively address disparate broadband access. According to the draft order, a recurring theme that arose in these listening sessions was the argument that digital discrimination rarely occurs through policies that intend to discriminate, and that the gaps instead more often arise from existing policies that unintentionally create a disparate impact on certain communities. Industry leaders and major telecommunications companies urged the FCC to limit the definition of digital discrimination to include only practices and policies intended to limit or discriminate against broadband access to certain communities, arguing that absent such a bright-line, companies could be liable for breaking the rules without intending to discriminate. The draft order, however, concludes that the FCC’s mandate to “facilitate equal access” would not be effective without a broader definition, noting comments received by the FCC that indicate instances of intentional discrimination are rare in comparison to the prevalence of facially-neutral policies that cause a differential impact to underserved or minority communities in the United States.

Who’s Impacted?

The draft rules define “covered entities” that are subject to the rule. Covered entities include “broadband internet access service providers and entities that provide services that facilitate and affect consumer access to broadband internet access service.” The Commission offers a non-exhaustive list of potentially impacted entities, including: (1) broadband internet access service providers; (2) contractors retained by, or entities working through partnership agreements or other business arrangements with, broadband internet access service providers; (3) entities facilitating or involved in the provision of broadband internet access service; (4) entities maintaining and upgrading network infrastructure; and, (5) entities that otherwise affect consumer access to broadband internet access service. The draft rules state that entities outside the communications industry that “provide services that facilitate and affect consumer access to broadband” may violate the digital discrimination rules if their policies and practices affect equitable broadband access as outlined in the rules. This draft definition of covered entities is intentionally broad, reflecting numerous comments that argued that there are platforms and organizations outside of traditional broadband providers that impact consumer access to broadband internet service.

The draft rules also outline “covered service” as broadband internet access service, including services provided over any technology platform (i.e., wire, terrestrial wireless and satellite) as well as technologies that provision broadband to consumers (i.e., digital subscriber line (DSL), cable modem, fiber, fixed and mobile wireless and satellite). This definition mirrors the definition of “broadband internet access service” in section 8.1(b) of the FCC’s rules. The draft definition of “covered elements of service” includes, but is not limited to, services like deployment of broadband infrastructure and network maintenance, service quality components and the terms and conditions of broadband service access, marketing and advertising activities and technical or onsite customer service. This broad definition is intended to enable the FCC to provide equal access to the entirety of broadband service and not just particular elements of such service.

Key Points

If adopted, the rules would establish a number of significant new definitions and mechanisms aimed at facilitating the identification, prevention and redress of digital discrimination as broadly defined in the draft order, as described more fully below.

• Adopt a broad definition of digital discrimination: Based on feedback from community listening sessions, the rules would define “digital discrimination of access” broadly to include both (1) business practices motivated by discriminatory intent, and (2) facially-neutral business practices policies that create discriminatory effects-i.e., disparate impact. This includes discrimination or disparate impact based on income level, race, ethnicity, color, religion or national origin.
• Allow the Commission to investigate and take action against violators: The rules would allow the Commission to take specific actions including: directing specific covered entity action if such entity’s policies and practices intentionally discriminate or otherwise create a disparate impact on consumer broadband access; using the protections to support equitable broadband deployment in communities; investigating potential instances of digital discrimination and assessing fines to involved covered entities; collecting and reviewing consumer complaints regarding digital discrimination; and protecting current and prospective subscribers to broadband internet services.
• Provide a mechanism for covered entities to seek a waiver in cases of technical or economic infeasibility: The draft rules would permit covered entities to offer technical and economic infeasibility, such as prohibitive costs to service a specific area or lack of existing technology that can serve a particular region, as reasons why they may not offer equal access to their networks. The draft order defines a technically feasible policy or practice as one that is “reasonably achievable as evidenced by prior success by covered entities under similar circumstances or demonstrated technological advances clearly indicating that the policy or practice in question may reasonably be adopted, implemented, and utilized.” It defines an economically feasible policy or practice as “reasonably achievable as evidenced by prior success by covered entities under similar circumstances or demonstrated new economic conditions clearly indicating that the policy or practice in question may reasonably be adopted, implemented, and utilized.” A covered entity can meet the standard by demonstrating technical and economical restraints that bar usage of less-discriminatory alternative policies or practices. This must be demonstrated by a preponderance of the evidence. The FCC will review such justifications on a case-by-case basis.
• Impose a causation requirement for disparate impact: To determine liability that warrants FCC action, the rules would require finding “robust causality” between a covered entity’s practices or policies and the disparate impact in question—i.e., that the differential effect is caused by the specific policies and practices of the covered entity. Under the draft rules, the FCC would then investigate whether (1) there exists a difference in access to broadband service caused by a specific practice or policy of the covered entity; and (2) the covered entity has provided adequate technical or economic feasibility reasons to justify the impact (i.e., the justification is not a pretext for prohibited discrimination). The draft rules further provide that the Commission will also consider whether there are reasonably achievable less discriminatory alternatives. The draft order also includes frameworks for addressing intentional discrimination, which focus on whether the challenged conduct is discrimination or a pretext for discrimination; these may be less frequently invoked given the FCC’s findings that allegations of intentional discrimination in broadband access are rare.
• Offer a blueprint for state and local governance: The draft order outlines model policies and best practices for preventing digital discrimination that states and localities can implement in line with the proposed rules. These guidelines, required under the IIJA, are neither mandatory nor exhaustive. States and localities may adopt this framework along with additional rules they deem necessary to promote digital equity. The model guidance includes practices like establishing broadband assessments to determine community needs and identifying local opportunities that could be helpful to incentivize equitable deployment. The draft order acknowledges that many states and localities may not have the funding to implement the recommendation, and refers to broadband funding allocation from the National Telecommunications and Information Administration (NTIA) or available Broadband Equity, Access, and Deployment (BEAD) program funding as opportunities to adopt these guidelines.
• Apply a mechanism for enforcement: The draft rules would allow the Commission, through the Enforcement Bureau, to enforce the prohibition against digital discrimination through FCC investigations and penalties, including remedial orders, letters of inquiry and forfeiture penalties. The draft order states that the Commission plans to use all traditional methods and available remedies to address violations of the rules.
• Create a pathway for consumers to submit potential violations: The draft order would revise the FCC’s informal consumer complaint process to accept complaints related to digital discrimination in broadband access. The draft provides that the FCC plans to leverage existing Commission systems to receive these informal complaints to minimize costs and facilitate ease of access for consumers to submit complaints.

Further Notice of Proposed Rulemaking

The draft order also includes a Further Notice of Proposed Rulemaking (FNPRM) seeking comment on a new set of reporting requirements that would require covered entities to publish annual reports on recently-completed deployment, upgrade and maintenance projects so the FCC can identify potential equitable access issues arising from such projects. The draft FNPRM also includes a proposal that would require providers to establish internal compliance programs to periodically evaluate the demographics of communities served by completed, pending and planned broadband projects. Comments on the FNPRM will be due 30 days after publication in the Federal Register, and reply comments will be due 30 days thereafter.

Takeaways

If adopted substantially as proposed in the draft order, the digital discrimination order and FNPRM will set the stage for the FCC to enact regulations that impact how broadband service providers allocate resources and deploy capital in their existing and planned networks, as the draft rules would require these providers to target and mitigate digital discrimination, as broadly defined by the FCC, in making those business decisions. An update to this alert will be published following the FCC’s vote on the draft order and FNPRM and the release of the final text.