Tag: FCC

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Regulation - What is it Good For?

Big ISPs Hate the FCC’s Digital Discrimination Rules

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.

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The Industry

My Predictions for 2024

BEAD Predictions. It’s clear that most state broadband offices are going to try to award all of the BEAD grants in 2024. There will be barely any BEAD construction completed in 2024, but there will be big hoopla over the handful of customers that get connected before the end of the year.

A lot of pundits have been predicting that a large majority of the funding will go to the largest ISPs to build fiber. But after reading the grant rules in numerous states, I’m not so sure. In some states, the big companies will win it all. States that emphasize the cost of the grant per passing might end up giving all of the money to WISPs. A few state rules are so obtuse that even the big ISPs might decide to take their money to a neighboring state.

RDOF Troubles. I’ve talked with a lot of local governments that haven’t heard a peep from RDOF winners. Most winners will be required to have completed 40% of the RDOF construction by the end of 2024, so this is the year that will flush out ISPs that are going to default. Defaults will probably be too late to attract any BEAD funding.

Wireless Technology Improvements Shake up the Market. 6 GHz radios will change the WISP landscape. New radios that include the giant 6 GHz channels will deliver much faster speeds. More WISPs will begin advertising gigabit speeds in 2024, but most will not deliver what they advertise – but speeds will still be fast.

Big cellular companies will use C-Band spectrum to boost speeds on FWA broadband. But a lot of rural counties that are hoping to get faster speeds will not see the new technology deployed in 2024.

The Beginning of Consolidation. We’re going to see some interesting acquisitions in 2024. I don’t know who, but some of them will be big names. There is a huge amount of venture capital suddenly interested in broadband, and as it becomes clear that these companies will not win as much BEAD grants as they hoped, they’ll turn their attention to acquisitions.

Cable Companies Will Lose Broadband Customers. The large cable companies collectively gained only 4,700 customers in the third quarter of this year, and the only one that grew was Charter. In 2024, customer losses will increase each quarter, and the cable industry is going to panic. Cable company board rooms are at a loss on how to stem the losses. They are now banking that the public will be happy with faster upload speeds with mid-split upgrades, but that isn’t going to impress customers who are offered a fiber alternative or a much cheaper FWA alternative.

Little Impact from FCC Broadband Regulation. If you listen to the rhetoric from the big ISPs, the double whammy of Title II regulation and the new digital discrimination rules will devastate ISPs and kill innovation and new investments. The reality is that there will barely be a peep from regulators concerning the new regulations in 2024. Some minor investigations will be undertaken, but the new regulation will have almost no impact on the market or investments.

Congress Will Let ACP Lapse. There seems to be a big consensus in Congress that the ACP program should continue., But I can’t picture the currently dysfunctional Congress approving new funding for the subsidy program before ACP runs dry. I think ACP will get renewed later in 2024, but only after first lapsing, which will create chaos for ISPs and customers. When ACP is renewed, the number of eligible households will be greatly pared down.

The FCC Will Launch the 5G Fund. This is intended to bring more rural cell towers. The industry says that $9 billion is not nearly enough to reach all of the places that need better cellular coverage, so counties and states will lobby fiercely to get included in the funding.

Big ISPs Will Continue to Buy Back Stocks Rather than Invest in Networks or Maintenance. This may be the least bold prediction I have ever made.

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Regulation - What is it Good For?

The Definition of Upload Speed

The FCC is in the process of increasing the definition of broadband from today’s paltry 25/3 Mbps to 100/20 Mbps. This blog looks at the FCC’s decision to consider 20 Mbps as the definition of upload.

We know where the 20 Mbps number comes from. Early discussions of the BEAD grant rules considered that grant-eligible areas would be anywhere that customers don’t have the option to purchase broadband with speeds of at least 100/100 Mbps. But cable companies and the wireless industry went ballistic, and there was furious lobbying to lower the BEAD coverage definition to 100/20 Mbps. The reason for this was obvious since both technologies at the time could meet the 100 Mbps download speed but could not meet a 100 Mbps upload speed requirement.

This means that the 20 Mbps definition is a political compromise that has nothing to do with the broadband speeds that households and businesses need. Interestingly, technology in those two industries is changing quickly, and cable companies and WISPs are on the verge of being able to meet 100 Mbps uploads if they upgrade to the latest technology.

Several of the big cable companies are currently implementing mid-split technology upgrades that I’ve seen reported as delivering from 100 Mbps to 300 Mbps upload speeds depending upon the local conditions in a cable company network. The big cable companies have all said that they intend to implement DOCSIS 4.0 upgrades that will enable gigabit upload speeds. But cable companies will likely continue to fight to keep the 20 Mbps definition because they will not want to upgrade their networks in smaller and non-competitive markets.

We’re also on the verge of big changes in fixed wireless technology. As WISPs implement the newest radios, and particularly when they integrate 6 GHz spectrum, the networks will be able to deliver much faster speeds. Wireless network technology is interesting in that the ISP can determine the amount of upload and download speed to offer – and as overall speeds get faster, WISPs will be able to deliver 100 Mbps speeds if they elect to do so.

We’re also seeing speed increases from FWA cellular wireless. Verizon recently reported the ability to deliver much faster speeds with the introduction of C-Band spectrum into towers. If they choose, Verizon and the other carriers using C-Band could also meet a 100 Mbps upload speed.

The FCC should consider a faster definition of broadband just because of the changes in technology. There is no reason to set a low definition of 20 Mbps upload that only rewards ISPs that want to stick with older technology. To do so is reminiscent of past FCC decisions that protected DSL long after it was obsolete.

What I find puzzling is that in the NOI, the FCC argued for a faster definition of upload speeds. They mention a study by the Consortium School Network (CoSN) that says that a single student working at home should have a 12 Mbps connection and a 20 Mbps connection is not sufficient to allow multiple students to work from home. The FCC also acknowledges that there are a lot of uses of broadband today that need faster connections. For example, the NOI cites that a 25 Mbps connection is needed for 4K video conferencing, telehealth, and remote learning. The FCC cites that graphics-intensive work can require a 45 Mbps connection. And they acknowledge what millions of gamers will tell you, which is that a 20 Mbps connection is far from adequate. Keeping a 20 Mbps definition of broadband is a regulatory decision that says that these faster uses of broadband are not important or needed.

We also can’t forget that the definition of broadband is not just for households. Cable company networks that offer 20 Mbps upload to businesses are massively inadequate. Businesses have migrated a lot of functions to the cloud, and I could list fifty ways that businesses want to use upload broadband – and many can’t due to slow technologies.

You might think that the definition of broadband is not important – but it says that any ISP connection slower than the definition is not really broadband. If the FCC considers a faster upload speed it will provide an incentive for ISPs to upgrade technology to meet a faster definition – since customers will demand speeds that are considered to be broadband.

Unfortunately, the FCC will likely adopt the 20 Mbps definition, and millions of homes, and particularly businesses, will continue to suffer with inadequate upload speeds for the next five years until the FCC looks again at the definition of broadband. This is a chance for the FCC to implement a policy change that will have real market implications. But the FCC probably doesn’t want to face the ISP lobbying effort to keep an inadequate definition of broadband – even as ISPs are already making upgrades that can meet a faster definition.

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Regulation - What is it Good For?

FCC Considers New Definition of Broadband

On November 1, the FCC released a Notice of Inquiry that asks about various topics related to broadband deployment. One of the first questions asked is if the definition of broadband should be increased to 100/20 Mbps. I’ve written about this topic so many times over the years that writing this blog almost feels like déjà vu. Suffice it to say that the current FCC with a newly installed fifth Commissioner finally wants to increase the definition of broadband to 100/20 Mbps.

The NOI asks if that definition is sufficient for the way people use broadband today. Of most interest to me is the discussion of the proposed 20 Mbps definition of upload speed. Anybody who follows the industry knows that the use of 20 Mbps to define upload speeds is a political compromise that is not based upon anything other than extreme lobbying by the cable industry to not set the number higher. The NOI cites studies that say that 20 Mbps is not sufficient for households with multiple broadband users, yet the FCC still proposes to set the definition at 20 Mbps.

There are some other interesting questions being asked by the NOI. The FCC asks if it should rely on its new BDC broadband maps to assess the state of broadband – as if they have an option. The answer to anybody who digs deep into the mapping data is a resounding no, since there are still huge numbers of locations where speeds claimed in the FCC mapping are a lot higher than what is being delivered. The decision by the FCC to allow ISPs to report marketing speeds doomed the maps to be an ISP marketing tool rather than any accurate way to measure broadband deployment. It’s not hard to predict a time in a few years when huge numbers of people start complaining about being missed by the BEAD grants because of the inaccurate maps. But the FCC has little choice but to stick with the maps it has heavily invested it.

The NOI asks if the FCC should set a longer-term goal for future broadband speeds, like 1 Gbps/500 Mbps. This ignores the more relevant question about the next change in definition that should come after 100/20 Mbps. According to OpenVault, over 80% of U.S. homes already subscribe to download speeds of 200 Mbps or faster, and that suggests that 100 Mbps download is already behind the market. The NOI should be discussing when the definition ought to be increased to 200 or 300 Mbps download instead of a theoretical future definition change.

Setting a future theoretical speed goal is a feel-good exercise to make it sound like FCC policy will somehow influence the forward march of technology upgrades. This is exactly the sort of thing that talking-head policy folks do when they create 5-year and 10-year broadband plans. But I find it impossible to contemplate that the FCC will change the definition of broadband to gigabit speeds in the next decade, because doing so would be saying that every home that doesn’t have a gigabit option would not have broadband. Without that possibility, setting a high target goal is largely meaningless.

The NOI also asks if the FCC should somehow consider latency and packet loss – and the answer is that of course they should. However, they can’t completely punt on the issue like they do today when FCC grants and subsidies only require a latency under 100 milliseconds and set no standards for packet loss. Setting latency requirements that everybody except high-orbit satellites can easily meet is like having no standard at all.

Of interest to rural folks is a long discussion in the NOI about raising the definition of cellular broadband from today’s paltry 5/1 Mbps. Mobile speeds in most cities have download speeds today greater than 150 Mbps, often faster. The NOI suggests that a definition of mobile broadband ought to be something like 35/3 Mbps – something that is far slower than what a urban folks can already receive. But talking about a definition of mobile broadband ignores that any definition of mobile broadband is meaningless in the huge areas of the country where there is practically no mobile broadband coverage.

One of the questions I find most annoying asks if the FCC should measure broadband success by the number of ISPs available at a given location. This is the area where the FCC broadband maps are the most deficient. I wrote a recent blog that highlighted that seven or eight of the ten ISPs that claim coverage at my house aren’t real broadband options. Absolutely nobody is analyzing or challenging the maps for ISPs in cities that claim coverage that is either slower than claimed or doesn’t exist. But it’s good policy fodder for the FCC to claim that many folks in cities have a dozen broadband options. If it were only so.

Probably the most important question asked in the NOI is what the FCC should do about the millions of homes that can’t afford broadband. The FCC asks if it should adopt a universal service goal. This question has activated the lobbyists of the big ISPs who are shouting that the NOI is proof that the FCC wants to regulate and lower broadband rates. The big ISPs don’t even want the FCC to compile and publish data that compares broadband penetration rates to demographic data and household incomes. This NOI is probably not the right forum to ask that question – but solving the affordability gap affects far more households than the rural availability gap.

I think it’s a foregone conclusion that the FCC will use the NOI to adopt 100/20 Mbps as the definition of broadband. After all, the FCC is playing catchup to Congress, which essentially reset the definition of broadband to 100/20 Mbps two years ago in the BEAD grant legislation. The bigger question is if the FCC will do anything meaningful with the other questions asked in the NOI.

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Regulation - What is it Good For?

A Peek Inside the FCC

I write a lot about the FCC, but I would imagine that a lot of the folks who read this blog don’t realize the many functions handled by the agency. Like any regulatory agency, the FCC staff and Commissioners have been tasked by Congress with a wide range of responsibilities.

The public gets to formally hear from the FCC once each month when the agency has its public meeting. These meetings are where the Commissioners vote on various issues. The monthly meetings operate much like a city council meeting, with items on a public agenda coming up for discussion or a vote.

In the November open meeting, the FCC will be voting on a wide range of issues.

  • The Commissioners will vote on a proposal that is supposed to identify and prevent digital discrimination. The FCC was required to examine this issue by November 15 in the Infrastructure Investment and Jobs Act.
  • The Commission will consider rules to help victims of domestic violence by helping survivors separate service from their abusers and also protect the privacy of calls made to domestic abuse hotlines.
  • The FCC will debate opening an investigation into the threats posed by artificial intelligence in the generation of robocalls and robotexts.
  • They’ll be looking at rules to thwart cell phone fraud by scammers who take over victims’ cell phone accounts by covertly swapping SIM cards to a new device or porting phone numbers to a new carrier.
  • They will consider rules to modernize ham radio by allowing operators to use digital tools.
  • They will look at a specific case that will reduce regulation in the rural long-distance market.
  • And while not on the listed agenda, the FCC is looking at resetting the definition of broadband to 100/20 Mbps.

The public meetings are only one small piece of what the FCC routinely tackles. Here are a few of the other ongoing functions of the FCC:

  • Is in charge of spectrum policy and use. Decides exactly how each slice of spectrum can be used and who can use it. Was in charge of wireless spectrum auctions – but this is now on hold.
  • Issues licenses to users of services the agency regulates. This includes radio and TV stations. This includes spectrum licenses, such as microwave links. It includes authority for companies to engage in international long-distance.
  • Approves communications devices before they hit the U.S. market. This includes a long list of electronics like computers and peripherals, power adapters, Bluetooth devices, remote control devices, IT equipment, WiFi and other wireless equipment, cellphones and telephones, radio transmitters, garage door openers, etc.
  • Approves and regulates satellite companies that will engage in communications.
  • Oversees the Universal Service Fund through an arrangement with USAC.
  • Participates in a Joint Board with state regulators looking at universal service policies and regulations.
  • Tackles ad hoc issues, like the current push to try to control and eliminate robocalling and spam calls. Another interesting, current effort involves examining how to improve communications for precision agriculture.
  • Is in charge of issuing telephone numbers.
  • Makes certain that those with disabilities have access to communications systems.
  • Oversees disputes from companies that engage in areas the agency regulates. Courts often remand lawsuits filed in the court back to the FCC.
  • Issues fines to companies that break its regulatory rules.
  • Accepts and sometimes tries to mitigate consumer complaints about regulated companies.
  • Coordinates with regulators around the world on issues of common interest, like spectrum usage and device compatibility.
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Regulation - What is it Good For?

Tackling Junk and Hidden Fees

The Federal Trade Commission recently proposed rules that would stop businesses from charging hidden fees. The agency estimates that junk fees cost consumers tens of billions of dollars per year.

The new rules would prohibit companies from jacking up bills with hidden and bogus fees and instead require that businesses clearly disclose their fees to customers. The new rules would also allow the FTC to order full refunds to consumers for any business that continues to bill the prohibited fees.

Specifically, the new rules ban the following practices by businesses:

  • Many companies advertise a low price and then spring hidden fees on customers at the time of purchase. Companies would be required to advertise the true cost of their products or services.
  • Companies would also be forbidden from using bogus fees, which are fees that seemingly have no purpose other than jacking up the price.

Hidden fees are a problem in numerous industries. Recently, several of the large ticket companies agreed to eliminate hidden fees after a loud public outcry after the sale of Taylor Swift tickets. Some hotel chains and airlines layer on extra fees that drive up the costs far above the advertised price.

Other federal agencies are joining the fight against these fees, including the FCC, The Consumer Financial Protection Bureau (CFPB), the Department of Housing and Urban Development (HUD), and the Department of Transportation (DOT).

The FCC proposed rules in June that would stop cable and satellite companies from charging hidden fees for cable TV service. The hidden fees for cable TV have grown so large that they sometimes exceed the advertised price of the cable product. Customers don’t generally find out about the hidden fees until they have signed a contract for the low advertised price and get the first bill. The FCC is tackling hidden fees for cable since it’s an industry that the agency still regulates. Hidden fees on cable have been outrageous for years, and it’s a fair question to ask why the FCC never addressed the issue in the past.

There are some hidden fees on broadband, but for now, the FCC can’t address these since broadband isn’t regulated – so I guess these fall under the FTC’s purview. The biggest such fees are mandatory modems, which some ISPs now charge as much as $15 per month. Another big hidden fee for some families is data caps that hit when customers use more than some arbitrary amount of broadband in a month. There are also smaller hidden fees like Frontier’s $1.99 fee for an Internet Infrastructure Charge – a bogus fee for which there is no specific underlying cost.

The initiative to eliminate hidden and bogus fees comes from prodding from the White House. President Biden made it clear to federal agencies a year ago that he expects them to tackle the issue.

This is something that has been badly needed for a long time. It’s too bad that the FTC is the agency doing this. The FTC typically only brings proceedings against specific companies, so compliance with this rule is going to be hit or miss. Smaller companies might continue to use the practice in the hope that they are small enough to stay under the FTC’s radar. But perhaps the FTC will levy large fines while also ordering full refunds against a few companies that don’t comply and scare most companies into compliance.

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Regulation - What is it Good For? The Industry

ACP Fraud

It seems like every time there is talk about increasing or renewing federal funding for broadband subsidies, the industry is flooded with stories about rampant fraud in the current subsidy programs. While there is some fraud and abuse, I have to think part of the reason for the stories is political and is raised by opponents of subsidies.

I’ve seen several recent stories talking about fraud in the ACP program. The stories say that unscrupulous ISPs are enrolling folks into ACP and then continuing to bill the FCC after customers no longer are getting broadband service. It’s not hard to believe that this is true.

We heard similar stories for years about the FCC’s Lifeline program which is funded by the Universal Service Fund. The big complaint for Lifeline fraud was that carriers would sign up customers that weren’t eligible for the program. The FCC took some major steps to address this issue by creating the National Lifeline Accountability Database (NLAD). This database is populated by the federal agencies that operate the programs that are used to qualify a household for Lifeline. By all accounts, this database got rid of a lot of the problems since the FCC won’t process payments for customers who are not included in the database.

But the current accusation that ISPs are billing for service that isn’t being delivered is a lot more troublesome. Other than minor infractions caused by billing errors, any ISP doing this is committing criminal fraud. This is a lot harder for USAC, the agency that handles Lifeline and ACP, to monitor and uncover.

I have a suggested fix for the problem. I would wager that most of the supposed ACP fraud is coming from cellular carriers. The ACP monthly $30 subsidy can be applied to either a cellphone plan or to home broadband. In some parts of the country, that subsidy can now be as high as $75 – which is going to invite even more fraud. My suggestion is that we stop using ACP to subsidize cellular service. The underlying concept of ACP is to get better broadband to folks, and I don’t care how you try to justify it – cell phone data is not a substitute for home broadband. Many people claim that they only use their cellphone as a broadband connection, but if they are more than a casual broadband user, they are probably getting most of their broadband through WiFi connections on somebody else’s broadband connection.

ACP should be used to subsidize home broadband. The Quello Center, which is part of the Department of Media and Information at Michigan State University, released a definitive study in 2022 that showed that students without home broadband and a computer at home struggle to become computer literate. One of the most startling findings was that an 11th grader without home broadband has about the same level of computer literacy as an eighth grader with home broadband.

I don’t want to sound heartless. I know that subsidies on cell phones provide a much-needed service to a lot of people. But the cellphone service being subsidized by ACP is not broadband – it’s limited access to the Internet. There ought to be a different program to provide subsidized cellphone service to those who need it.

I would guess that eliminating the cellular companies from ACP would eliminate most of the fraud. Many of the cellular companies participating in ACP do not own cellular networks and are reselling wholesale service from somebody else. These are not facility-base carriers or ISPs.

There may be landline ISPs also committing fraud, and if so, I hope that USAC and the FCC nails them. But most ISPs I know are not going to endanger their network business by chasing extra dollars through fraud. Any network owner that does this should be penalized with huge fines and also prohibited from participating in any federal broadband program for at least a decade. That means no ability to win grants or subsidies. That would mean no ability to sell services using the Schools and Library funds or the Rural Healthcare funds.

I am sure that there are cellular carriers participating in ACP who are good actors and are not committing fraud. But bad actors are endangering the whole program that is vital for millions of low-income households to get affordable broadband. It’s really hard to make a case that cellular service is equivalent to a home broadband connection, and we should stop pretending that it is. Eliminating cellular carriers from ACP probably instantly eliminates most of the fraud problem and would have the additional benefit of extending the life of the ACP fund.

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Regulation - What is it Good For?

Another Challenge to FCC Authority

There is a new legal challenge that could alter the way that the FCC and other federal agencies regulate industries. The issue was highlighted in an article by John Eggerton in Multichannel News.

The Supreme Court has agreed to hear the case of Relentless Inc. et al v. Department of Commerce, et al. The specifics of the case are about the ability of the National Oceanic and Atmospheric Administration (NOAA) to regulate fishing. Specifically, fishermen have to pay for the cost of having NOA monitor their herring catches. There is a lot of speculation that the Court is open to weakening the ability of regulatory agencies to make new regulations.

This may sound like is not relevant to the FCC, but the case could impact all federal agencies that enact regulations that have not been specified by Congress. Agencies feel empowered to make regulatory rulings based on the Chevron doctrine. This doctrine comes from a strong ruling by the Supreme Court in 1984 in the case of Chevron U.S.A., Inc. v. Natural Resources Council, Inc. The lawsuit involved a challenge from Chevron that challenged the ability of the government to create and enact environmental rules that were not specifically ordered by Congress. Chevron also comes into play whenever there are conflicting laws from Congress – agencies get to interpret any conflicts.

Chevron is considered a landmark case where the Supreme Court gave substantial deference to the ability of government agencies to enact regulations. The Supreme Court ruling looked specifically at cases where agencies enact regulations that were not specified by Congress. The Court, in Chevron, looked instead at the intent of Congress when it gave agencies the power to enact regulations. A simplified explanation of Chevron is that the Court ruled that regulators are allowed to regulate as long as agencies stay within the overall framework of responsibilities given to them by Congress when the agency was created.

The Chevron doctrine has already been used by the Supreme Court related to the FCC in the 2005 case of NCTA v. Brand X Internet Services. The Court relied on the Chevron doctrine in ruling that the FCC had the authority to classify broadband as an information service that is not subject to common carrier regulation. This same ruling was used as subsequent FCCs reimposed Title II regulation and then reverse that decision a second time.

The issue is certainly going to arise again if FCC Chairwoman Jessica Rosenworcel goes through with her recently announced intention to reclassify broadband as a telecommunications service. The reason that Chevron was needed in the 2004 Brand X case is that Congress has been moot on the topic of regulating broadband. The last major related ruling from Congress was the Telecommunications Act of 1996, which preceded the explosion of the Internet. While there have been attempted bills introduced in Congress over the years to formally regulate broadband, Congress has apparently never had the necessary votes to enact broadband regulation.

Overturning Chevron would result in regulatory chaos since every regulatory agency makes rules that are not specifically spelled out by Congress. This would mean lawsuits challenging both new rulings by regulatory agencies but also older decisions. This also will likely results in the confusion that will come when courts issue conflicting opinions on the same topic.

Ending Chevron would mean that regulatory agencies will lose more court fights concerning new regulations, making it harder to create or modify regulations. Chaos will also abound since challenges to new regulations will result in a long delay as regulations are argued in court. This could mean a lot more delays, and for a longer time, for any new regulations not specifically required by Congress. Of course, Congress could avoid all of this by enacting explicit laws for regulations it cares about – but I don’t think anybody expects that.

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Regulation - What is it Good For?

The FCC Plan for Better Rural Cellular Coverage

The FCC recently released a Notice of Proposed Rulemaking (NPRM) that restarts an initiative to improve rural cellular coverage. The proposed FCC funding is for $9 billion to create a 5G Fund to subsidize the construction of rural 5G cell sites. These funds would be paid out over multiple years from the Universal Service Fund.

I’ve been working around the country with rural counties, and the lack of cellular coverage is often on par as a local issue with the lack of broadband. Huge numbers of people don’t have cell coverage at their homes and don’t have the outdoor cell coverage that everybody else takes for granted.

The FCC first proposed this in 2020, but the initiative came to a sudden halt when it became obvious that the large cellular carriers had provided maps that substantially overstated where they have coverage. It might seem counterintuitive for the big cellular carriers to overstate coverage for a program that wants to pay to build cell towers, but smaller cellular carriers said the purpose of the overstatements was to lock them out of the FCC funding. The FCC largely agreed and killed plans for the program until it got better maps.

Cellular carriers must now participate in the twice-annual broadband mapping that is required for ISPs. The FCC must believe that the maps are now better.

The NPRM starts by asking if the original concept of using a reverse auction to award the funding is the best approach. This is a case where a reverse auction might make a lot of sense. A cellular carrier that asks for the least amount of funding for a given rural tower location would get the funding. I assume that most winners are going to welcome other wireless carriers to use the towers, so it might not be that important who wins each location.

The bidding is going to be more complicated than a simple subsidy per location. The FCC is asking if it should consider factors like the miles of roads and the number of homes and businesses around each proposed site. The FCC is also asking how they might aggregate bids for multiple cell sites in a region rather than having bids required for each cell site.

The NPRM also asks about several technical issues, such as if the 5G Fund should favor the deployment of open radio access network (O-RAN) technology.

The FCC is also asking if the availability of landline broadband should be considered. This makes a lot of sense because of the huge amount of money being spent on BEAD and other broadband grants that will mean a proliferation of rural fiber that can provide backhaul to newly constructed towers. This fund should not be used to construct fiber if it’s already built or is soon coming.

It will be interesting to see if the FCC opens the 5G Fund to local governments and not just to companies in the cellular or tower industries. I know several counties that have built towers hoping to expand broadband and cellular coverage, and there are many other county governments that see the lack of towers as vital to their economic success.

There is a tool that might help rural areas qualify for the funding. The FCC is gathering cellular speed tests to document where coverage is poor. The speed tests can only be done using the FCC’s speed test app. Unfortunately, this app requires a lot of speed tests in a given neighborhood before the FCC will even consider the results. Local governments should or motivated individuals should consider undertaking an effort to collect many speed tests with the app in the areas with the worst coverage.

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Regulation - What is it Good For?

Defining Broadband Discrimination

One of the provisions of the Infrastructure Investment and Jobs Act (IIJA) is that it requires the FCC to “take steps to ensure that all people of the United States benefit from equal access to broadband internet access within the service area of a provider of such service.” In legalese, the term equal access, in this case, means that consumers should be able to expect to get the same speed, capacity, and latency as other customers buying the same product from the same ISP sold elsewhere. This new mandate has been labeled as a prohibition against digital discrimination.

The FCC is required by the IIJA to make a pronouncement of its interpretation of the discrimination rules in November. The FCC is going to have to define how it will identify digital discrimination and what remedies the FCC might have in mind for anybody who violates the principle. One of the interesting discussions on the topic is who this applies to, since the IIJ language doesn’t specifically mention ISPs. Might this also apply to landlords that own multiple apartment buildings? Might this apply to state or local government policies that promote discrimination?

I think a normal person reading this requirement might assume that Congress didn’t want ISPs to win the upcoming gigantic broadband grants and then discriminate against communities for any reason – but particularly because of a difference in income levels between communities. A number of the big ISPS have been accused over the years of redlining – of offering the best technology and prices to neighborhoods with the highest household incomes.

One of the challenges facing the FCC is to define what constitutes digital discrimination. As you might imagine, ISPs are taking a very different approach to the issue than public interest groups. ISPs think that the FCC should focus on intentional discrimination – against policies and practices by an ISP that are clearly intended to discriminate against the public. If the FCC’s standard is intentional discrimination, then the FCC would have to prove that an ISP is purposefully discriminating before it can take any action. If discrimination rules are based on this interpretation, then it’s hard to imagine many cases where an ISP would be found guilty of discrimination. It would probably require a believable whistleblower from inside an ISP to prove that an ISP was deliberately discriminating.

Public interest groups think that the FCC should instead concentrate on disparate market impacts where ISP actions have resulted in discrimination, regardless of an ISP’s intentions. Under this test, ISPs that always avoid building in low-income neighborhoods or that have different price policies for neighborhoods based on household incomes could be found to have violated digital discrimination. The proof of the discrimination would be found in the market results instead of the ISP’s intentions.

The FCC is required to deliver its digital discrimination policy to Congress and then act on the defined principle in the future. At a minimum, I would bet that ISPs are going to have to periodically certify to the FCC that they don’t discriminate. Beyond that, the agency is going to have to define the process by which it will identify discrimination and take action to remedy violations of the principle.

In practical application, many FCC policies only apply to giant ISPs – but I’m not so sure about this one. Is a small ISP discriminating if it only builds fiber to higher income neighborhoods? We’ll find out in November.

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