The FCC passed rules last year that prohibited ISPs from engaging in discrimination in the marketplace. The FCC ruling was required to adopt discrimination rules by the Infrastructure Investment and Jobs Act (IIJA).

The FCC took an interesting approach to the issue of discrimination and defined discrimination in two ways. The FCC prohibited intentional discrimination – meaning that ISPs can’t have policies and practices that are clearly intended to discriminate against the public or a portion of the public. The FCC also prohibited disparate discrimination, which measures discrimination in the market by looking at the results of ISP practices rather than judging ISP intentions.

There is a huge difference in practical terms between the two tests of discrimination. Intentional discrimination might be nearly impossible to prove. Assuming an ISP has good lawyers, the ISP will be careful never to publish anything that would indicate that it has an intention to discriminate. It would likely require an internal whistleblower to ever prove that an ISP intentionally discriminated against some portion of the public. If intentional discrimination is the only test, then ISPs know that the FCC would only ever be able to intervene in extremely egregious ISP behavior.

However, disparate discrimination is far easier to prove because proof comes from looking at the actual impacts in the market. For example, an ISP that offers higher prices only in low-income neighborhoods might be found guilty of disparate discrimination. The downside of this test is that regulators might find signs of discrimination that are really not intended.

As was expected, ISPs quickly sued the FCC to block the implementation of the disparate discrimination rule. The U.S. Chamber of Commerce brought the first suit in the Fifth Circuit Court of Appeals in January. The suit included big ISPs like AT&T, Charter, Comcast, T-Mobile, and Verizon. The suit was eventually consolidated into the Eighth Circuit Court of Appeals after two additional lawsuits were lodged against the FCC order.

Twenty industry groups joined together recently to file an opening brief that summarizes the positions of ISPs in the case. The petition includes industry groups like NCTA, WISPA, ACA Connects, and US Telecom.

The primary argument of the ISPs is that Congress never intended to impose a disparate discrimination test. They argue that disparate liability is rare in all sectors of regulation. The ISPs also raised a new issue. They argue that the FCC is violating the major questions doctrine with the ruling. This is a new regulatory concept based on recent Supreme Court rulings that prohibit federal agencies from adopting regulations that have “vast economic and political significance” without clear authorization from Congress.

It looks like the case isn’t going to be heard until at least the late fall, and meanwhile the appeal has put the FCC order on hold.

I have to wonder if the FCC ever had a reasonable path forward. The whole issue of having to make a ruling on discrimination was forced on the agency by Congress. If the FCC adopted only the intentional discrimination rules it would have adopted discrimination regulations with no teeth. It doesn’t seem likely that such rules would ever come into play unless some ISP went completely off the rails.

By adopting the disparate discrimination approach, the FCC gave itself the ability to investigate the kinds of discrimination that are evident to the public. The disparate discrimination rules give the authority to the FCC to make carriers cease bad behavior based on finding real-world evidence of discrimination.

There doesn’t seem to be any halfway measure between intentional discrimination and disparate discrimination. If the courts decide that the only test is intentional discrimination, then the FCC will be left with discrimination rules that will almost never be used. It’s hard to think that is what Congress intended when it ordered the FCC to develop rules about market discrimination.