FCC should tread carefully in crackdown on digital discrimination
Eric Fruits
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The infrastructure bill that President Joe Biden signed in November 2021 included a provision requiring the Federal Communications Commission to prevent discrimination in access to broadband internet based on race, ethnicity, color, religion, or national origin.
That sounds reasonable enough. Americans don’t like discrimination — there are scads of federal laws forbidding it. Many don’t like their Internet service provider, either — service providers are even less popular than gas stations and the United States Post Office.
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But the infrastructure bill also tells the FCC to prevent discrimination across another dimension: income level. This is where things can get really messy for the FCC and broadband providers. While it’s relatively straightforward to define racial discrimination, how should the FCC define “income discrimination?”
More specifically, the law calls for the FCC to police discrimination in broadband access, which is different from the prevailing rates of broadband adoption. To be sure, to adopt broadband services, you first need to be able to access them. But policymakers should be careful not to infer that lack of adoption is necessarily caused by discriminatory lack of access. Research finds that consumer income and the affordability of broadband services are key factors influencing whether those who have broadband access will ultimately choose to pay for broadband service.
Other factors broadly correlated with income, such as age, educational attainment, and whether the household owns and uses a home computer, likewise influence decisions to buy broadband service.
In the infrastructure bill, Congress instructs the FCC to bear in mind issues of technical and economic feasibility in crafting its discrimination rules. But it is virtually impossible to disentangle factors that affect economic feasibility from those that are correlated with income. For example, population density is a key factor in determining whether a broadband investment is economically feasible. But density is also correlated with income level — as well as with other socioeconomic factors such as race, ethnic origin, educational attainment, and computer ownership.
In a recent policy brief, the International Center for Law & Economics found that some tests of so-called “digital discrimination” on the basis of income can be misleading, and their application could be counterproductive. This is particularly true of effects-based tests, such as those that seek whether there has been “disparate impact” on certain groups.
The U.S. Supreme Court has established tests governing when it is appropriate to conduct an effects-based “disparate impact” analysis in the context of discrimination law. Applying these tests to the infrastructure bill, one finds that it lacks the “results-oriented language” the court demands. Therefore, the prohibition against digital discrimination would apply only in cases of intentional discrimination. In other words, statistical correlations between deployment and protected characteristics is insufficient to support a finding of discrimination.
Even so, efforts are underway to make the case that digital discrimination is widespread throughout the United States. Research published by the Markup claims that several wireline Internet service providers “disproportionately offered lower-income and least-white neighborhoods slow internet service for the same price as speedy connections they offered in other parts of town.”
But policymakers should be cautious before reading too much into the Markup’s report. In particular, the authors note that they did not include some of the biggest ISPs in the country. Comcast was excluded because it does not offer different speeds for the same price. Charter was excluded because all the speeds the company offers were in the authors’ “blazing fast” speed category.
The study examined only speed and pricing for AT&T, Verizon, EarthLink, and CenturyLink. But Earthlink rents infrastructure from other carriers and does not make broadband deployment investments.
This is a clear case of sample-selection bias. If you sample across only those providers who offer different speeds for the same price, you’ll find providers offering different speeds for the same price.
Despite the flaws in the Markup’s study, it’s a useful tool for evaluating digital discrimination. Since the infrastructure act is only concerned only with access, the study is not relevant for the FCC’s rulemaking. Perhaps more importantly, the study demonstrates that any evaluation of alleged digital discrimination must be undertaken on a case-by-case basis that considers the idiosyncrasies of each provider and each jurisdiction.
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If Congress and the FCC seek to close the “digital divide,” it would be wise to avoid creating inefficient bureaucratic processes through which broadband providers would be forced to defend economically justified deployment decisions. FCC rules should articulate a presumption of nondiscrimination, in which allegations of digital discrimination must be demonstrated, rather than a presumption of discrimination that must be rebutted for each deployment decision.
Eric Fruits is a senior scholar with the International Center for Law & Economics and co-author of the issue brief “The Income Conundrum: Intent and Effects Analysis of Digital Discrimination.”