How the FCC’s Regulatory Overreach Impedes Internet for All

Closing the digital divide is a top priority for many policymakers and the private sector. Understandably so given that an internet connection is essential for modern life including work, school, healthcare, banking, and communication. However, achieving this important goal is hampered by the Federal Communications Commission’s (FCC) regulatory overreach that micromanages the broadband marketplace. 

What to Know about the FCC's Latest Actions

The FCC is pursuing two major rulemakings that significantly and adversely impact the broadband marketplace and Americans’ ability to get online.

• Digital Discrimination: This rulemaking seeks to address alleged digital discrimination in the broadband marketplace and to ensure equal access to broadband across income level, race, ethnicity, color, religion, and national origin. While everyone opposes intentional discrimination, the FCC embraced a legally questionable and onerous disparate impact standard where a business can be held liable for legitimate business and deployment decisions even if they did not intend to discriminate.
• Title II Reclassification: Reclassification would cause broadband to be regulated under the same 1930s-era public utility framework for legacy telephone networks. If upheld, it would allow the FCC to exercise extraordinary powers over nearly every aspect of broadband and empower the FCC to pick and choose which sections of Title II to apply to broadband—making the Commission a de facto legislator. 

How Rules Upend Long-Standing Consensus on Communications Policy

Both rulemakings are expansive and upend the long-standing communications policy in the U.S. of light-touch regulation and targeted federal investments to support broadband deployment and affordability.  

• Title II reclassification would impose utility style regulations on the broadband industry and place every internet service provider under a regulatory microscope as opposed to the decades-long bipartisan framework which allowed the internet to flourish.  
• The digital discrimination rules would cover every business practice related to providing broadband access, including broadband deployment decisions, quality of service metrics, customer service, and even prices. What’s more, the FCC unilaterally expanded its authority to regulate any business or local government that facilitates or affects access to broadband potentially bringing in landlords, infrastructure owners, marketing and advertising firms, and construction companies.  

Understanding the Legal Concerns

Both rulemakings rest on shaky legal grounds that make them vulnerable to court challenges and contribute to significant policy uncertainty for private sector innovators. 

• Many experts, including the Chamber, argue that Title II reclassification likely runs afoul of the Supreme Court’s major questions doctrine considering the history of Title II, political and economic impact, and lack of clear Congressional authorization.  

• The scope of the FCC’s digital discrimination rules and inclusion of a disparate impact standard vastly exceed the FCC’s statutory authority and the U.S. Supreme Court’s guardrails for disparate impact liability announced in Texas Department of Housing & Community Affairs v. Inclusive Communities. 

The Negative Impact of These Rules on Closing the Digital Divide

Both rulemakings will hinder the goal of connecting all Americans and undermine policymakers’ efforts to build modern broadband networks. 

• Title II imposes a burdensome regulatory structure over the broadband industry and the threat of additional regulations emanating from Title II creates significant uncertainty. Last time the FCC attempted Title II regulation, investment in broadband networks slowed for the first time outside of a major economic event.  
• The new digital discrimination rules’ disparate impact liability and the threat of regulatory action means that far-left activists, through regulators, would regularly second guess business decisions in the broadband industry, chilling private sector investment and increasing cost of every business decision. 

Looking Ahead

Each rulemaking is at a different stage. On November 15th, the FCC voted 3-2 to approve the digital discrimination rule. Pending any legal challenges, the rules are expected to go into effect next year. Title II reclassification is at the beginning of the rulemaking process with comments due this month, and the FCC is likely to adopt rules in Spring 2024.

The U.S. Chamber continues to fight harmful regulations that hinder the private sector's ability to bring reliable, fast, and secure broadband to communities across the country.  

About the authors

Matt Furlow