The big ISPs certainly have their knickers in a knot over the adoption of digital discrimination rules by the FCC. The FCC was required to adopt some version of digital discrimination rules by language included in the Infrastructure Investment and Jobs Act. The IIJA Act says that the FCC needs to prevent discrimination based on income level, race, ethnicity, color, religion, or national origin.
The big controversy that has stirred the big ISPs is the definition of discrimination. The ISPs wanted discrimination to be defined as intentional discrimination where an ISP purposefully decides not to serve somebody. The trouble with that definition is that it would likely require a whistleblower with documentation from inside an ISP to prove intent. The FCC adopted intentional discrimination but also adopted what it calls disparate market impacts, which means the agency can consider discrimination that is obvious in the market without having to prove an ISP’s intent.
The ISPs have been screaming loudly against the FCC decision. Perhaps one of the best summaries of the ISP’s outrage comes from a recent editorial in the Wall Street Journal. I don’t provide links to articles behind paywalls, but a Wall Street Journal editorial warns that the new rules will weaken the Internet by giving the FCC the power to micromanage the industry. They roll out examples of how the FCC might abuse its new power.
“Marketing materials that feature too many white people could be ruled discriminatory. Companies could be forced to scrap credit checks that cause more minorities to be rejected for smartphone leasing plans. Providers could even be punished for charging the same prices to all customers since their rates might have a disparate financial impact on minorities. The FCC could likewise prohibit low-cost wireless plans that include data caps because these are selected more often by people with lower incomes. . . Wireless carriers might also be prohibited from building out 5G networks in suburbs and city downtowns before inner cities and rural areas.”
I have always enjoyed a good lobbying rant, and the above is a classic. We saw a lot of the same kind of overblown rhetoric from both sides during the process leading up to the net neutrality decision a few years ago.
It’s obvious that the Wall Street Journal has fully adopted the arguments being made by the giant ISPs. The reality is that big ISPs don’t want any regulatory rules or oversight. It’s laughable to think the FCC would be upset that an ISP charges everybody the same rates. That’s the very definition of non-discrimination. Discrimination is more likely going to be claimed due to practices like the study last year that uncovered that Charter was offering the highest prices in the poorest neighborhoods of Los Angeles.
The big ISPs are particularly distraught over the idea of the FCC monitoring digital discrimination since it is coupled with a likely vote to reintroduce Title II regulation of broadband. They are worried that the combination of the two sets of regulations will mean they won’t be free to do anything they like in the market. The unspoken worry that the big ISPs don’t want to talk about is the fear that regulators will put pressure on them to stop big annual rate increases. It’s hard to fathom the FCC ever deciding to directly regulate broadband rates, but it’s not hard to picture them putting public pressure on ISPs to keep rates affordable.
The Wall Street Journal is using the rhetorical trick of pointing out the most extreme ways that the new regulations could be used. But it’s rare for regulators to go to the extremes. The new regulations do not mean that the FCC is going to come down on the big ISPs with a hammer. The FCC didn’t do that the last time when Title II was the regulatory framework. But it does mean that the FCC is likely to call out some of the most obvious abuses by the big ISPs and possibly force them to cease the worst practices.
That’s what regulation is supposed to do. A handful of large ISPs have near-monopoly power in the broadband market, and the job of regulators is to balance that power by making sure that the general public still gets a fair shake. You’ll not hear the big ISPs talking about that.