FCC Seeks Oral Argument in Digital Discrimination Challenge

The FCC asked the 8th U.S. Circuit Appeals Court to schedule oral argument on an industry coalition's challenge of the commission's digital discrimination rules (see 2407080012). In a brief (docket 24-1179), the FCC said issues in the Minnesota Telecom Alliance's (MTA) challenge are "complex" and oral argument "may assist the court." However, in its reply brief, MTA and a coalition of industry groups urged the court should decide that the discrimination rules are unlawful and set aside the FCC's digital discrimination order.

The FCC argued that its order takes a "measured approach" and "faithfully implements" Congress' anti-discrimination mandate. "Providing equal access to telecommunications services has been a central goal of the commission since its inception," the brief argued.

The industry groups disagreed. The FCC "cannot contort the text" of the Infrastructure Investment and Jobs Act's Section 60506, which directed the FCC to adopt digital discrimination rules, to "execute a massive power grab that Congress never intended," they said in their reply brief. It's "simply not plausible that the bipartisan Congress that enacted Section 60506 handed the commission a blank check."

"In the end," the groups' brief continued, "the commission’s inability to defend its rule should not be surprising." It added: "Congress never said a word authorizing disparate-impact liability, let alone the inventive form of disparate-impact liability that the commission adopted here." The "concept of equal opportunity is more consistent with preventing disparate treatment than disparate impact."

The FCC pushed back on whether Congress intended to establish a disparate-impact standard. "The statutory purpose supports the commission's interpretation," it said, noting Congress' findings in the infrastructure law "confirm its concern with the effects, not only the purpose, of discriminatory conduct" related to broadband. "Neither silence in section 60506’s legislative history regarding discriminatory effects nor the post-enactment statements of individual legislators is entitled to interpretive weight."

The groups raised concerns about the rules potentially being read to bar ISPs from "charging a uniform price for their service" because "any one price would disparately affect the ability of consumers of different income levels to access the service." Even if the FCC's rules focus solely on the comparability aspect of pricing, the groups warned, they "still implicate ordinary and benign business practices like targeted discounts or promotions."

The FCC countered that its digital discrimination rules are "confined to practices with unjustified discriminatory effects" and "the comparability of broadband service offered to consumers," not "ordinary business practices." The commission argued that it "reasonably predicted that requiring providers to ground their practices in sound and neutral business objectives will not discourage rapid and efficient deployment of broadband service."

However, the groups cautioned that a disparate-impact framework "has real costs" on the broadband industry. "It will reduce investment incentives, particularly in areas served by small and rural ISPs." The FCC "cannot simply load up one side of the scale and ignore what is on the other side."

The FCC, in a footnote, said it "did not ignore effects on smaller broadband providers." Instead, the regulations will "minimize burdens on them." The commission said it received more than 1,400 pages of public comments from a wide range of stakeholders on the proposed rules.