OPINION:
At their idealistic best, our federal regulatory agencies can serve as checks against market imperfections and prevent the mistreatment of consumers. But at their worst, regulators can treat the expansion of the administrative state — and the corresponding expansion of their own power and clout — as a goal in itself. Growing government and feeding an agency’s reach can become the mission.
I saw both sides of this coin over my seven years serving on the Federal Communications Commission and 20 years before that as a congressional staffer. Yet I’m struggling to recall examples of self-serving overreach more blatant and egregious than what the FCC is now attempting in its supposed quest to stamp out “discrimination” in broadband access, especially because the commission admits it can’t find any evidence of actual discrimination to begin with.
The 2021 infrastructure bill granted the FCC certain authority to enact rules to prevent discrimination in broadband access based on income level, race, ethnicity, religion or national origin. The commission then spent almost two years investigating the marketplace, collecting data and listening to stakeholders.
The resulting verdict started out crystal clear: The FCC majority admitted finding “little or no evidence … that intentional discrimination by industry participants … substantially contributes to disparities in access to broadband Internet service.” President Biden’s senior advisers at the National Telecommunications and Information Administration agreed, admitting that “documented evidence of disparate treatment in this area is nearly non-existent.”
One would expect reasonable regulators to respond to such a clear-cut conclusion with restraint and humility. After all, an agency hardly needs a regulatory sledgehammer to eliminate discrimination it concedes doesn’t even exist. This FCC, however, wasn’t willing to let the facts stand in the way of an unfettered expansion of government intervention and market control.
Instead, the commission moved the goal posts, redefining discrimination to include any disparities in broadband availability or adoption rates, even if stemming from plainly neutral business practices. The resulting order grants the agency unprecedented power to dictate and micromanage almost any aspect of the broadband business, including prices, speeds, latency, marketing, installation and customer service. Even residential landlords would find themselves under the FCC’s all-powerful thumb.
This jaw-dropping regulatory overreach is deeply flawed, both practically and legally.
As a practical matter, this sweeping yet incredibly vague order leaves broadband providers with little clear guidance on what practices might someday be considered “discriminatory” — while opening them up to massive liability if they happen to guess wrong.
For example, imagine an internet service provider offering customers the choice of three different speed tiers — slightly higher prices for faster download speeds, slightly lower prices for the slower options. We could reasonably expect lower-income customers might disproportionately choose the cheaper option. Under this regime, the FCC might then rule that the ISP’s pricing and marketing practices resulted in a “disparate impact” on customers’ subscribed speed choices, opening the company to uncapped liability damages.
Now imagine another company, eager to avoid that risk, chooses instead to offer only one speed option at a single uniform price. In that case, some percentage of lower-income customers — stripped of the option of lower-priced service — might not subscribe at all. The FCC could then rule the company’s policies are causing a disparate impact on broadband access, once again exposing the company to huge penalties.
It’s a game of “damned if you do, damned if you don’t.” Even Kafka would roll his eyes at the absurdity of it all.
So what business practices might actually survive this regulatory gauntlet and earn the FCC’s blessing as “nondiscriminatory”? In short, that will depend on the whims and ideological preferences of whoever might lead the FCC at any point in the future. While this FCC has supposedly signaled that it will be reasonable, norms and precedents will whipsaw with every new progressive administration.
Such high-stakes uncertainty risks paralyzing innovation and investment — at precisely the moment our country desperately needs greater private broadband investment to bring high-speed service to every corner of rural America. Isn’t that supposed to be a pillar of this administration’s agenda?
The silver lining, however, is that the FCC’s extreme power grab seems likely to collapse under its own weight. Several state-based trade associations have filed legal challenges arguing the commission has vastly overstepped its authority. Several senators who voted for the infrastructure bill have gone on record stating unambiguously that their intent was to empower the FCC to prevent intentional discrimination, not to unleash it to micromanage the entire industry. Federal courts, guided by the major questions doctrine, seem unlikely to bless a regulatory agency unilaterally ceding itself such expansive powers absent explicit authority from Congress.
While we wait for the courts to rule, policymakers in both parties should study this episode as a cautionary tale of the dangers in elevating regulatory authority as an end rather than a means. The FCC should refocus on its core mandate of encouraging universal broadband deployment and adoption — and let the thriving broadband marketplace take things from there.
• Michael O’Rielly served as a commissioner at the Federal Communications Commission from 2013 to 2020. Before that, he spent nearly two decades as a telecommunications policy adviser to Senate and House Republicans.
Please read our comment policy before commenting.