Update: FCC Adopts Digital Discrimination Rules in Party-Line Vote

Key Points

• On November 15, 2023, the FCC adopted rules aimed at preventing discrimination in access to broadband services.
• The FCC vote satisfies the Commission’s obligation under the IIJA, which requires the FCC to create rules that prevent digital discrimination by ensuring equal access to broadband services for all Americans.
• The vote, which was split 3-2 along party lines with the Democratic Commissioners in favor and the Republican Commissioners opposed, is likely to catalyze potential legal challenges and is already facing significant criticism and pushback from the broadband industry, as well as Republicans on Capitol Hill.
• The final rules include additions from the draft order released in October like establishing a presumption of compliance for covered entities already complying with existing programs addressing the digital divide and creating an advisory opinion process to clarify the digital discrimination regulatory regime.

Background on the Proposal

The Federal Communications Commission (FCC or the Commission) adopted rules aimed at preventing digital discrimination of access at its Open Meeting on November 15, 2023, meeting the statutory deadline for the establishment of such rules set by the Infrastructure Investment and Jobs Act (IIJA). The rules are intended to address discrimination in the provision of broadband service based on the characteristics listed by Congress in the IIJA: income level, race, ethnicity, color, religion and national origin.

The new rules complete a lengthy regulatory process that started in 2022 with the release of a Notice of Inquiry (NOI), followed by a Notice of Proposed Rulemaking (NPRM). The Commission then authorized its Task Force to Prevent Digital Discrimination to hold eight listening sessions with affected communities to collect feedback on the proposals in the NPRM. Following these sessions and a review of comments on this matter, as we previously reported, the FCC released a draft order and proposed rules on October 25, 2023, for circulation prior to its November 15 vote. While the final rules do not differ significantly from the draft order, some key points are highlighted below.

The Adopted Rules and Relevant Changes

A principal purpose of the rules is to define “digital discrimination of access,” which the FCC does as “policies or practices, not justified by genuine issues of technical or economic feasibility, that (1) differentially impact consumers’ access to broadband internet access service based on their income level, race, ethnicity, color, religion, or national origin or (2) are intended to have such differential impact.” Notably, and as explained in our earlier alert, this definition encompasses both practices that intend to have a discriminatory impact and also practices that are facially neutral but have a discriminatory effect in practice. Covered entities must not engage in digital discrimination of access as defined by the FCC to avoid liability under the rules.

Liability may be avoided if a covered entity is able to provide a “genuine” indication of technical or economic constraint. The rules emphasize that the liability covers discrimination in access not only at the point of initial subscription, but also to the policies and practices occurring after a customer subscribes to broadband internet access services. According to the final order, this broader view is intended to ensure that there is incentive to both expand broadband access to underserved communities and to maintain the access such that no American suffers from degraded access to internet services.

The final rules include a change supported by broadband industry advocates and the National Telecommunications and Information Administration (NTIA). The FCC will now maintain a presumption of compliance for policies and practices that are compliant with NTIA’s Broadband, Equity, Access and Deployment (BEAD) Program and the FCC’s Universal Service Fund program, both of which aim to resolve the digital divide and eliminate inequities in broadband service access. The final rules also expand this presumption of compliance to future broadband deployment programs that account for the digital discrimination of access rules.

Additionally, the rules provide the FCC with its regular set of tools for investigation and enforcement. One major change between the draft order and the final rules is the inclusion in the final rules of an advisory opinion process to “provide greater regulatory certainty and assist covered entities seeking to comply” with the new rules. Under this process, which is similar to a process adopted by the Commission in 2015 regarding its then-effective open internet rules, a covered entity may seek guidance from the FCC on whether a current or prospective policy or practice is permissible in terms of its impact on broadband access. The rules note that the Commission will not consider a mere hypothetical scenario in issuing an advisory opinion; the practice or policy in question must be one that a covered entity is currently or is planning to utilize. The FCC’s Enforcement Bureau will handle the advisory opinion process.

The final rules, in another change from the draft rules, also establish the position of Special Advisor for Equal Broadband Access within the Wireline Competition Bureau as a neutral administrator able to provide assistance to consumers and industry stakeholders on topics including but not limited to the scope of the rules, permissible policies and practices, access to relevant digital discrimination resources and support for filing complaints or requesting advisory opinions.

Finally, the FCC added more areas for comment to its Further Notice of Proposed Rulemaking (FNPRM). Specifically, it now seeks additional comments on whether it should include data from its proposed annual reporting requirement in existing reports released by the Commission for greater transparency. The FCC also requests input on whether it should create an Office of Civil Rights, as suggested by advocates and broadband providers, and if so, what set of issues would be handled by that office. Comments on the FNPRM will be due 30 days after publication in the Federal Register and reply comments will be due 60 days after the date of publication.

The Path Ahead

As expected, the digital discrimination rulemaking process highlighted the partisan divide on the issue. FCC Chairwoman Jessica Rosenworcel, along with Commissioners Geoffrey Starks and Anna Gomez, supported the rules as a strong measure in line with the Biden administration’s goals to address and mitigate disparate impacts in access to broadband internet services. The dissenting opinions of Commissioners Brendan Carr and Nathan Simington portend some of the legal challenges the FCC may face ahead. Commissioner Carr, in a lengthy dissent, condemned the FCC’s new “sweeping regulatory regime” and contended that the FCC has greatly overstepped the authority granted to it by Congress. Commissioner Simington further argued that the new “open-ended liability regime” and particularly the enforcement scheme are outside of what Congress contemplated when enacting the IIJA. Of note, the House Communications Subcommittee, led by Republican Congressman Bob Latta, has already announced a hearing on November 30 intended to investigate President Biden’s “Broadband Takeover” and the FCC’s efforts to “micro-manage Americans’ broadband services.”

We will be tracking this space as the FCC begins issuing regulations in line with the rules.