WASHINGTON, January 15, 2024 – On Wednesday, the Supreme Court will hear a case about federal regulation of the fishing industry.

Anyone who thinks the case is about fish is going to need a bigger boat.

In reality, this whale of a case could harpoon the Federal Communications Commission, which is clearly at risk of seeing its newly approved, highly controversial digital discrimination rules aimed at broadband Internet Service Providers get fed to the sharks.

Since 1984, the Supreme Court’s Chevron Doctrine has required lower courts to defer to an agency like the FCC when reasonably interpreting vague legislative language passed by Congress. The doctrine was established in Chevron U.S.A. v. Natural Resources Defense Council.

Opponents of the Chevron Doctrine aver that judicial deference has gone too far, leading to outsized accretions of bureaucratic power that threaten the nation’s constitutional order sustained by the separation of powers.

“Chevron deference has become a central pillar of the modern administrative state,” said Stanford Law School Professor Michael W. McConnell. “Although Chevron appeared routine when it came out, it has become the most important doctrine in administrative law.”

The FCC under Democratic Chair Jessica Rosenworcel has a lot riding on the high court’s ruling in Loper Bright Enterprises v. Raimondo, which is ostensibly about the regulation of fisheries under the Magnuson-Stevens Act of 1976. A decision is not expected for several months after Wednesday’s oral arguments.

In November, the FCC adopted Internet digital discrimination rules as required by Congress in section 60506 of the Infrastructure Investment and Jobs Act of 2021.

The FCC rules included a “disparate impact” standard imported from civil rights law that can hold ISPs liable for unintentional acts of discrimination across a broad range of activities – from the price and quality of Internet service to late fees, equipment rentals, and the use of customer credit and account history.

Litigation on the basis that the FCC developed rules far broader than Congress intended is inevitable.

“The FCC’s regulatory overreach will prove impossible to administer and impossible to comply with,” said Michael Powell, President & CEO of the NCTA – The Internet & Television Association, in a Nov. 15, 2023 statement.

The Supreme Court likely has at least five justices who want to dismantle the Chevron Doctrine entirely. The Court majority that would do so is likely the same one that in 2022 barred an agency like the FCC from adopting rules of vast economic and political significance without explicit authority from Congress.

The Chevron Doctrine has its defenders, including the Environmental Defense Fund and other green groups that say opponents of judicial deference have been exaggerating the harms.

“This campaign is marked by the kind of sloganeering, argument by anecdote, and sacrifice of empirical rigor that are all too familiar in hardball politics but out of place in legal argumentation,” the EDF said in its amicus brief filed with the Supreme Court last September. “Like any shrewd campaigners, petitioners and their supporters seek to ‘drive up the negatives’ by misstating what Chevron instructs.”

Last June, an article on the Natural Resources Defense Council’s website disputed ideas that the Chevron Doctrine gave an agency like the FCC “a rubber stamp” to adopt onerous rule and regulations. Ironically, the NRDC supports the maintenance of the Chevron Doctrine, even though it was the losing party in the 1984 case.

“…As noted by the Brennan Center for Justice, a nonpartisan law and policy institute, federal agencies face legal challenges to their rules all the time – and only prevail in about 70% these challenges, even with the Chevron Doctrine on their side. In other words, their powers are far from unchecked,” the article said.

A problem with the NRDC article’s analysis is that it gave equal weight to each case in the sample. Broadband ISPs have much more at stake in their likely legal challenge to the FCC’s digital discrimination rules than in their potential case taking on new FCC rules requiring Internet providers to display ‘Broadband Nutrition Labels’ at the point of sale.

In the end, by scuttling the Chevron Doctrine, the Supreme Court will not only reel in a big fish like the administrative state, it will also send Congress a message about the need to craft clear laws.

“Congress will face more pressure to clearly articulate agency authority and delegate fewer details to administrative agencies,” the Brownstein Hyatt law firm said in a client alert last May.

Ted Hearn is the Editor of Policyband, a new website dedicated to comprehensive coverage of the broadband communications market. This piece is was published on Policyband on January 15, 2024, and is reprinted with permission.

Broadband Breakfast accepts commentary from informed observers of the broadband scene. Please send pieces to commentary@breakfast.media. The views expressed in Expert Opinion pieces do not necessarily reflect the views of Broadband Breakfast and Breakfast Media LLC.

This chart, taken from the European Union Report on Broadband, shows that a triple play — phone, cable TV, broadband-Internet, can cost about 36 Euros for a service with 30–100 Mbps speeds, and 21 Euros for a stand alone service.

The average U.S. triple play is about $220.00 a month, and with an exchange rate of 1 Euro=$1.09 Dollars, the overcharging, which we documented, is $150+ a month — or more.

The Digital Divide was created, in large part, because prices are unaffordable, and America is now paying for over 20 million low-income families to have broadband — up to $30. a month allowance.

America’s prices are out of control, yet where are the investigations and audits to explain how overseas prices are a fraction of what we are paying in the U.S.? And why are we giving billions to the companies that helped to create the Digital Divide in the first place?

We assembled our previous research with new findings in this new series, using both 3rd party expert analysis as well as actual examples from December 2023, comparing and detailing the out of control US prices vs the services of free Telecom in France and Spectrum-Charter in New York City.

America’s broken promises and the state 5-year broken broadband plans

America’s prices for broadband have made high speed internet unaffordable for many households, Moreover, the pandemic revealed a major Digital Divide where whole areas of the U.S. were never upgraded to fiber optic networks, much less high speed services even over the copper wires. Thus, no competition to lower rates.

And every state now has plans to ‘bridge the Digital Divide’, but in all of the state broadband plans, none have addressed how the Divide started in their state or about the massive financial price divide between America and the EU or Asian countries that charge a fraction of the prices charged in the US.

Over $150 billion is being given out in state and federal government subsidies over the next few years, and much of It going to the companies that helped to create the Digital Divide.

The states must investigate the core issues as they impact almost every FCC, NTIA, FTC, Congressional and state current and future actions.

The opening chart tells the tale of how the European countries did not allow for massive multiple additional made up fees, such as the Broadcast-Sports fee ($27.90 on a Spectrum Triple Play). Moreover, the services do not charge ridiculous prices for equipment, such as set top box, that is required to use the service. Also, because there is competition, customers have choices and prices have not skyrocketed, but are actually going down.

America’s prices are 5–10 times higher than comparable data from other countries

How can America’s prices for the stand-alone, double and triple play — (phone, cable TV and ISP-broadband) be 5–10 times more when comparing data from other countries, as highlighted in the European Union Commission’s report, published July 2022 for the year 2021. And, as the report details, even basic stand-alone high speed broadband prices overseas are a fraction of what we’re paying in the U.S.

• America’s “Double play” — high speed broadband and phone service — is being overcharged, on average, almost $75 a month — a whopping $900 a year.
• The “Triple play” is being overcharged by $180 a month on average; this comes to overcharged, over $2,200 for the triple play.

The current triple play in America, after the promotional prices end, is now around $220.00 a month, yet overseas, the average was around $40 a month, but the prices overseas are in decline. However, in some countries, it can be as low as $23.00 for 200 Mbps or more; only $15 for the double play.

According to the EU report, we’ve even been beaten out by Bulgaria, Romania and let’s not forget Slovakia:

• “Overall, Lithuania and Romania have the most attractive prices for broadband internet in the EU. All the offers in these countries belong to the cluster of the least expensive countries in their respective baskets. Bulgaria, Latvia and Slovakia follow. Poland, Hungary, France and Spain have low prices especially for Triple Play.”

But when the EU report says prices are “attractive”, we are talking $10–12 bucks a month for stand-alone broadband and $20–23 for the triple play, with speed of 200 Mbps or more.

By the way, Bulgaria does get Netflix and their Top 10 shows are close to America’s viewing.

How is it possible that America’s Triple Play is $150-$200 a month over what is being charged overseas? That’s over $2,200.00 a year ‘extra’ being charged to families — including low-income families and fixed income seniors. This is on top of the fact that there could be only one or no providers of high-speed services in the rural regions or in low-income neighborhoods of cities.

It would be one thing if it was a small differential between the overseas EU group and others price of service, but this is a difference that is too large to be ignored.

What are the underlying issues?

No Serious Competition to keep market forces and rate increases at bay. First, AT&T et al. failed to show up with high-speed competition to keep the cable companies, the other group of providers that use a wired connection, in check. For example, in CA, AT&T-Pac Bell had obligations to bring fiber optic broadband throughout the state and our maps showed that much of AT&T’s entire Los Angeles county region had been left to deteriorate and not upgraded as promised with fiber optic infrastructure.

Made-up Fees and surcharges are out of control. One of the sleaziest practices in the US has become the addition of made-up taxes, fees and surcharges that are not mandated or government sanctioned. This is being done so that the companies can quote a price that is missing 20–40% of the total costs,

Made-Up Taxes include:

• Broadcast and Sports surcharge: $15–24.00 a month
• Cost Recovery Fee: $1.99–2.99
• Admin Fees: $1.49-$2.99 per month
• Pass-through taxes, Gross receipts tax, telecom taxes

The largest and most egregious added fee is now the Sports and Broadcast surcharge, which is really 2 separate charges that have been merged in many cases:

“Made-up, Broadcast-Sports Fees Up 820%; Overcharging $250+ a Year — then Quintuple-Taxed, Fee’d and Surcharged.” This article was written in December 2021, and along the way there have been increases bringing the total charge on the Spectrum NY June 2022 bill to $23.70 a month. This one fee on the Spectrum NY Triple play bill is more than the entire charges for a triple play in many overseas EU countries.

This charge went up to $27.90 a month extra in 2023. That is an overall increase of 1,140%.

• Quadruple Taxed, Fee’d and Surcharged. — If the increases to this one fee is not enough, there are made-up taxes, fees and surcharges being applied to this fee as it is considered ‘revenue’ to the company and is taxed as such. And some of these surcharges are actually tax pass-throughs where the company gets to have the customer pay the company’s taxes.
• It is impossible to calculate the exact tax assessment as there is no ‘Rosetta Stone’ to be able to unravel how each tax, fee and surcharge is applied.

But, considering that basic telecom taxes can be 12–20% depending on the city and state, if a 15% tax is applied, that would add an additional $3.55 more per month.

• Not included in the advertised price: To add irony to obfuscation, this fee is never included in the advertised rates, nor is it added completely in the promotional price, making the increases after the promotion even more egregious.
• Not included in the EU statistics for the U.S. Triple Play: Ironically, the EU informed us that they do not include the extra charges and fees in the US because — well, the other countries only have a VAT (Value Added Tax), and not the made-up fees.
• No Oversight, No Audits; Regulators Failed U.S.: The idea that a state-franchised cable service or the Holding Companies that control the state telecommunications public utility can just make up fees and add them to bills with no one asking for a cost analysis or some other justification to raise this make-believe charge, should have the peanut gallery screaming.
• Public has Amnesia: No one knows who these local telecom companies are or what they’ve been able to get away with. And virtually no one could answer basic questions about who the companies are or the services they offer.
• Let’s give government subsidies to keep America in a perpetual state of “Please Sir May I have another?” Currently there are subsidies being given to low-income families to go online, which are then handed over to the same companies that have caused this Divide in the first place; i.e.; a new flavor of Corporate Welfare. We will address these issues in an upcoming story.

The telecom holding companies that control the critical infrastructure wires, towers and antennas created the Digital Divide. They also control the pricing of all services, wireline, wireless, broadband, internet and even cable, and as we will discuss, they also were able to manipulate the accounting formulas to have the state telecom utility act as a cash machine to fund, illegally, the other lines of business.

America must go after these cooked books and must clean up the mess. There is plenty of money to get America upgraded, and it must be seen as the first step in LA County to clean up the mess and decades of public policy and regulatory issues.

Government subsidies, both state and federal, to companies who have created the Digital Divide and can control the prices and profits over the public utility wires needs immediate investigations — not more gifts of largesse.

Bruce Kushnick is Executive Director of New Networks Institute and a founding member of the Irregulators. He has been a telecom analyst for 40 years, and playing the piano for 65 years. A version of this piece originally appeared on Medium on January 9, 2024, and is reprinted with permission.

Broadband Breakfast accepts commentary from informed observers of the broadband scene. Please send pieces to commentary@breakfast.media. The views expressed in Expert Opinion pieces do not necessarily reflect the views of Broadband Breakfast and Breakfast Media LLC.

With the historic broadband funding finally hitting the states this year, we are at an exciting juncture in the deployment process. As we begin this new phase, it is essential that states, cities, and towns have processes in place to ensure they are ready to hit the ground running when the money arrives in their bank accounts.

Many of our members plan to actively compete for the BEAD money, so we have submitted comments directly to the states on their Initial Proposals to NTIA. Through these comments, we have stressed the importance of ensuring state broadband offices address barriers to deployment including gaining access to the public rights-of-way and streamlining the permitting process.

To reinforce this, we put together the “Broadband Ready City” Checklist as a guide for state and local governments to coordinate and effectively implement the $42.5 billion Broadband Equity, Access, and Deployment Program.

The checklist covers five points on promoting fair and reasonable costs on applications and accessing the rights-of-way, to timely permitting reviews, greater transparency in the review process, and promoting more innovative deployment processes and construction techniques such as micro-trenching.

We were excited to see Kansas be one of the first states to lead on adopting specific local ordinances ahead of time and before any BEAD funding is awarded. I would like to personally commend Governor Laura Kelly and the Kansas Office of Broadband Development for their work in introducing a new statewide program called “Kansas Broadband Ready Communities.” This is an important step in the right direction.

By certifying communities and towns as a Broadband Ready Community, these state and local review guidelines will enable faster processing that will allow the deployment of broadband infrastructure more quickly, including small cells and other wireless equipment and fiber that is used by both fixed and mobile providers to connect their networks. An efficient and effective permitting process will help ensure that the taxpayer’s investment through the BEAD Program will deliver broadband service faster and more affordably.

We appreciate the Kansas Office of Broadband Development taking this important step, and we urge other states to build on this and implement the language of our “Broadband Ready City” Checklist.

As we continue to work hard to bridge the digital divide, we believe this process will serve as a catalyst for removing barriers to deployment at the state and local level and lead to more successful broadband projects in the future.

Chip Pickering is CEO of INCOMPAS, the internet and competitive networks association. For nearly three decades, he has been at the forefront of every major telecommunications milestone, from his time as a Senate staffer on the Commerce Committee shaping the Telecommunications Act of 1996, to his role as a Member of Congress leading on tech issues and overseeing the transition to the commercial internet. This piece is exclusive to Broadband Breakfast.

Broadband Breakfast accepts commentary from informed observers of the broadband scene. Please send pieces to commentary@breakfast.media. The views expressed in Expert Opinion pieces do not necessarily reflect the views of Broadband Breakfast and Breakfast Media LLC.