FCC Widely Expected to Adopt ISP Privacy Rules as Proposed by Wheeler
ISPs, and the groups that represent them, made a last pitch in reply comments at the agency to try to get the FCC to back down from tough privacy rules that apply only to ISPs. But industry observers said Thursday the FCC appears likely to move in a matter of months to approve rules as proposed by Chairman Tom Wheeler in March (see 1603310049). Many of the ISPs noted the FTC raised questions about the FCC’s approach and whether it would create major differences between how ISPs and other companies are regulated (see 1606020062).
Several industry experts agreed with April comments by FCC Commissioner Mike O’Rielly that “the fix is in” on final rules (see 1604130054). The FCC didn’t comment.
“Chairman Wheeler is rushing to get some heavy-handed privacy regulations on the books before the election, but they’re not going to have the desired impact in light of the current state of his candidate’s [Hillary Clinton’s] email woes,” said Richard Bennett, free-market blogger and network architect. “Consumers and responsible web sites that use encryption, which the better ones do, have nothing to fear from ISPs.”
“Wheeler has indicated a deaf ear to the many calls to align closer to the FTC framework and seems intent on seeing the proposal through, so I expect the FCC moves quickly with rules largely as proposed,” said Doug Brake, telecom policy analyst at the Information Technology and Innovation Foundation. But Brake predicted “vote wrangling” in the set-top box proceeding could affect the privacy vote.
Groups that support the proposal also said they expect an FCC majority to approve the rules largely as proposed by Wheeler. “I think the consumer and privacy coalition has made the case in our multiple comments why Chairman Wheeler’s proposal is urgently required,” said Jeff Chester, Center for Digital Democracy (CDD) executive director. “Americans face an uncontrolled and growing privacy threat from [broadband internet access service] companies. Our coalition hopes to see rules adopted by early fall.”
A lawyer who represents ISPs on privacy issues said some changes are possible. The FCC is likely to change direction on security breach notices because the NPRM’s proposal is very overbroad, the lawyer said. “I also think that there is reasonable chance that the FCC proposal will move in the direction of the FTC privacy framework.”
“I’m not sure there even will be tweaks,” said Roger Entner, analyst at Recon Analytics. “I can't remember seeing such a case of textbook rent seeking than this. The edge providers are achieving a complete victory eliminating a significant competitive threat to their business model from the network providers.”
“I think overall the comments make a pretty convincing case that the FCC proposal goes too far in imposing more stringent regulations on ISPs than the FTC imposes on web giants like Google and Amazon,” said Randolph May, president of the Free State Foundation. “The opt-in requirement the FCC proposes to impose, which the FTC doesn’t, is especially troublesome because not only will it confuse consumers, it will ultimately diminish the amount of information available to consumers that they are likely to want.” But May said he's not optimistic there will be major changes to the proposed rules. “I’m afraid they are looking at the election cycle clock more than the record evidence,” May said of the FCC majority. “We’re entering what scholars call the ‘midnight rulemaking’ period.”
In reply comments in docket 16-106, industry commenters urged the FCC to move closer to the FTC’s approach on privacy. Public interest groups urged the FCC to stay the course.
Public Interest Groups Urge Quick Action
A Public Knowledge-led coalition encouraged the FCC to move quickly to adopt tough rules. “Congress has already determined that when an entity engaged in either telecommunications services or provision of video services uses information in an unauthorized manner, regardless of whether the information is exposed to third parties, the use causes harm to the subscriber and conveys an unwarranted windfall on the operator,” the filing said. In pushing for a regime based on the FTC model “several commenters have embraced the same type of ‘content-based’ distinctions that they condemn elsewhere as violations of the First Amendment,” the coalition said. The Benton Foundation, the Center for Digital Democracy, Consumer Action, the World Privacy Forum, the Consumer Federation of California, the Consumer Federation of America and the National Consumers League signed the filing.
CDD said a lack of rules for ISPs, not rules different from the FTC's, would lead to consumer confusion. ISPs hold a “significant position in the data eco system,” CDD said. ISP data practices “already undermine the privacy of their customers and ... they are in the process of further building out their powerful data management capabilities,” the group said.
Various consumer groups addressed a narrow issue in joint replies, disputing arguments that NTIA should be responsible for developing rules. “We believe that the FCC has the authority and the obligation to promulgate these rules, but setting that issue aside, it is clear to us that it would be impossible to reach consensus on protecting broadband customers’ privacy through the NTIA multistakeholder process or any similar forum,” said CDD, Consumer Action, the Consumer Federation of America, Consumer Watchdog and the Privacy Rights Clearinghouse.
CTIA Urges Follow FTC's Lead
ISPs disagreed. “While the FTC’s proposals do not resolve CTIA’s statutory or constitutional objections -- nor indeed all of CTIA’s policy concerns -- many of these recommendations would go some distance toward the creation of a consensus, uniform, technology-neutral regime,” CTIA said in reply comments. “CTIA therefore urges the Commission to use the FTC’s recommendations as a starting point.”
Verizon also said the FTC urged the FCC not to create a separate set of rules just for ISPs. “Those commenters who support the Commission’s proposed rules -- as well as those few who argue that the rules should be expanded even further -- have failed to provide any justification for applying unique (and especially burdensome) rules on broadband providers that are imposed on them alone and that are inconsistent with the standards that apply to other Internet companies,” Verizon said.
“The record here should give the Commission pause, because it is rife with serious questions regarding the efficacy and utility of the proposed rules,” NCTA said. Most commenters agree the FTC’s approach on privacy “would be far more likely to safeguard privacy and benefit consumers, competition, and innovation than would the regime proposed in the NPRM,” the cable association said.
The Multicultural Media, Telecom and Internet Council and other civil justice groups also urged the FCC to base its rules on the FTC approach to privacy. ISPs shouldn’t be regulated differently from edge providers, MMTC said. The FTC approach “has been working and has led to industry practices that consumers are coming to understand,” the council said. Blacks in Government, Consumer Policy Solutions, the Hispanic Technology and Telecommunications Partnership, the LGBT Technology Partnership, the National Black Caucus of State Legislators, the National Coalition on Black Civic Participation, the National Organization of Black Country Officials and the National Puerto Rican Chamber of Commerce joined the filing.
TechFreedom and the Competitive Enterprise Institute accused the FCC of regulatory overreach in its privacy proposal. The FCC put itself in the position of having to act by regulating broadband as a common carrier service, outside FTC control, the groups said in a joint filing. “The FCC is doing far more than simply replicating the FTC’s approach in an area that the FTC can no longer regulate (because of the FCC),” they said. “The FCC is not merely replacing case-by-case enforcement of general standards with a more specific rulemaking, it is inventing new requirements based on new substantive standards that would give the FCC even more discretion than the sweeping discretion previously enjoyed by the FTC.”
The FCC shouldn’t stifle what's growing into a huge market, Tech Knowledge said. The market for digital advertising, at $59.6 billion, three times larger than the $18.6 market for broadcast TV advertising, is still growing at double-digit rates, the group said. “Just as watching ads is part of the price consumers pay for free broadcast television, providing access to user data is part of the price consumers pay for the internet as we know it today,” Tech Knowledge said.