Ben Sperry: The FCC’s Digital-Discrimination Detour Hits a Dead End

When Congress told the Federal Communications Commission to prevent “digital discrimination of access” to broadband, it gave the agency a narrow job: stop broadband providers from discriminating based on income, race, national origin, and other protected traits.

The FCC tried to turn that assignment into something much larger.

In November 2023, the agency adopted a sweeping digital-discrimination rule that imported disparate-impact liability into the broadband market. It reached beyond internet-service providers to landlords, contractors, equipment makers, and almost anyone else who might “affect consumer access to broadband.” It also gave the FCC broad discretion to second-guess any “policy or practice” that produced statistical disparities—including pricing.

This week, the 8th U.S. Circuit Court of Appeals got it right. The court vacated the FCC’s order, holding that the 2021 Infrastructure Investment and Jobs Act does not authorize disparate-impact analysis and does not extend to entities other than broadband providers. The decision is a major win for innovation—and for the consumers who would have paid for the rule’s chilling effect on broadband investment.

The court’s reasoning should sound familiar to anyone who followed the case. As the International Center for Law & Economics (ICLE) and the Information Technology & Innovation Foundation (ITIF) warned in an amicus brief, the FCC’s interpretation would have made the agency the “central planner for nearly everything related to broadband, from deployment to policies and practices that affect even adoption itself, including price of the service.”

That was not a throwaway line. The FCC’s rule would have narrowed the room businesses need to make the “practical business choices and profit-related decisions that sustain a vibrant and dynamic free-enterprise system.” The Supreme Court used that phrase, and the 8th Circuit quoted it in concluding that the FCC’s rule could not be squared with the statute Congress wrote.

The decision matters for two reasons.

First, the court recognized that “based on” means what it has long meant in civil-rights law: intentional discrimination on the ground of a protected trait. The Supreme Court has made clear that disparate-impact liability requires results-oriented language. Congress did not include such language here.

The FCC tried to read disparate impact into a statute that does not contain it. That would have converted a targeted nondiscrimination mandate into a general regulatory license over the broadband sector. The court rightly refused to bless that move.

Second, the panel rejected the FCC’s expansive theory of who counts as a covered entity. The agency claimed authority over any entity that could affect consumer access to broadband. That theory would sweep in landlords who decide where equipment may be installed, contractors who build networks, manufacturers who supply gear, and many others far removed from providing broadband service.

The statute points elsewhere. It focuses on providers of broadband internet-access service. The court agreed that the FCC’s rule failed to give other entities clear notice of what policies or practices might trigger liability. As the opinion put it, the agency asked for a “trust us” approach that gave “little comfort to regulated parties facing enormous non-compliance penalties.”

That is exactly the problem. A regime that lets the FCC define liability after the fact does not prevent discrimination. It deters lawful conduct at the margin and chills the investment Congress sought to encourage.

The practical stakes can get lost in the doctrinal weeds. Broadband deployment is hard and expensive. It depends on population density, terrain, easement law, supply chains, local permitting, and construction costs. Those constraints often have nothing to do with discriminatory intent.

Under the FCC’s rule, those same real-world constraints could have created liability whenever they produced statistical disparities across protected classes. Rational providers would have responded predictably: pull back on marginal builds, delay upgrades to lower-margin networks, and ask the FCC for advisory opinions before deploying new service.

The communities most likely to lose from that caution are the same communities Congress wanted to help. The Infrastructure Investment and Jobs Act aimed to close the digital divide, not make broadband deployment legally riskier and economically harder.

The 8th Circuit restored the statute Congress actually passed. It also offered a useful reminder: Preventing discrimination is too important to become a slogan that lets an agency remake an industry.

The FCC has tools to address the digital divide, from universal-service programs to oversight of broadband-infrastructure funding. It does not have a roving commission to centrally plan broadband. The court has now said so—and broadband consumers, especially those still waiting for better service, are better off for it.

Ben Sperry is a senior scholar of innovation policy at the International Center for Law & Economics. He was a co-author of the ICLE/ITIF amicus brief in Minnesota Telecom Alliance v. FCC. This Expert Opinion is exclusive to Broadband Breakfast.

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