Prior to the COVID pandemic, most broadband service providers (“BSPs”) offered heavily discounted but capable internet plans to lower-income households for about $10 to $15 per month.  Dissatisfied with these market-based solutions, the Infrastructure Investment and Jobs Act of 2021 (“IIJA”) established the “Affordable Connectivity Program” or “ACP.”  Under the ACP, the federal government provides a $30 per month subsidy (or $75 per month for tribal areas) to lower-income households that they can apply to the cost to any internet service offering of the participating provider at the same terms available to other households.  Broadband providers typically offer $30 broadband plans that make the service essentially free with the subsidy.

Although the ACP is a more efficient subsidy model than existing byzantine Universal Service Fund programs and has helped close the Digital Divide, Congress has yet to reauthorize the program.  As a result, funding for the ACP has run out, and earlier this year the Federal Communications Commission (“FCC”) closed the program to new subscribers.  In a matter of months, the ACP budget will be exhausted and, without new funds to replenish the program, some 23 million participants will be forced to pay full price for broadband services (tempered perhaps by migrating to a cheaper plan).

Naturally, with the potential demise of the ACP, one might think the BSPs would come to the rescue by continuing to offer low-priced plans—discounts strongly supported by (if not mandated by) the Commission and the White House.  Unfortunately, other provisions of the IIJA and new FCC policies may make such private-sector offerings illegal.  

Section 60506 of the IIJA expressly prohibits “digital discrimination of [broadband] access based on the protected classes limited to income level, race, ethnicity, color, religion, or national origin,” including requiring services to be offered on “comparable terms and conditions,” though subject to technical and economic feasibility.  Statistical analyses of the Commission’s latest data on deployment, as well as Census data, do not reveal any differences in broadband availability by race or income.  Nonetheless, the FCC recently adopted aggressive Digital Discrimination rules to ensure equal treatment along income and racial lines, including bans on both intentional and inadvertent (disparate impact) discrimination.  

Note that Section 60506 makes no provision to allow for different plans for different income levels.  In fact, its goal is exactly the opposite:  Section 60506 expressly seeks to prevent any differentiation in price based on income.  Following this language, the FCC’s Digital Discrimination rules require “comparability in [] price” and “pricing consistency [] between different groups of consumers.”  

But therein lies the problem.  

Since the BSPs’ discount plans are restricted to households that meet certain income requirements, usually 200% below the poverty level, such discounts are intentionally and nakedly discriminatory in income and incompatible with Section 60506 and the FCC’s prohibition on income discrimination.  Higher-income households may not avail themselves of the discounted price, yet these households are equally protected by Section 60506 as are lower-income households.  The law does not say that some income levels or some races are more protected than others.  And, since minorities, on average, have lower incomes, a favorable price offered only to lower-income households (and not offered to households with higher incomes) could be legitimately argued to be prohibited discriminatory conduct under the FCC’s rules.

Which brings us back to the point of the pencil:  To comply with Section 60506 and the FCC’s rules, BSPs may not compensate for Congressional inaction on re-funding the ACP by offering low-priced plans only to low-income households. Nor can BSPs offer low-priced plans to lower-income households as improperly demanded by the National Telecommunications and Information Administration (“NTIA”) for purposes of BEAD funding.  To do so appears to constitute a prima facia case of prohibited discrimination under the plain terms of the IIJA and the FCC’s rules.  This is true for either the $30 plans offered today alongside ACP or the $10-$15 plans offered prior.  

Will BSPs be willing to take this significant legal risk?  Who knows.  What we do know, however, is that due to the poor legislative draftsmanship of Section 60506 (and the FCC’s overzealous enforcement of this statute), once again the Law of Unintended Consequences is rearing its ugly head. 

Solutions to this quagmire are apparent, regardless of whether the ACP is funded going forward or not.  Congress must abandon Section 60506, or else rewrite it, including foremost the exclusion of income as a protected class.  And even when excluding income as a protected class, the FCC’s must avoid the use of “disparate impact” analysis, since income discrimination may be linked to race. 

Section 60506’s Digital Discrimination requirements are a mess of Congress’ making; fixing them is Congress’ responsibility.

Dr. George S. Ford is Chief Economist of the Phoenix Center for Advanced Legal & Economic Public Policy Studies (http://www.phoenix-center.org), a non-profit 501(c)(3) research organization that studies broad public-policy issues related to governance, social and economic conditions, with a particular emphasis on the law and economics of the digital age.