Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Commissioner Ohlhausen calls on technology regulators to embrace regulatory humility, (Mar 19, 2014)

By Jeffrey May, J.D.

Commissioner Maureen K. Ohlhausen discussed the FTC’s future role in protecting consumers and competition on the Internet at the Free State Foundation’s Sixth Annual Telecom Policy Conference on March 18 in Washington, D.C.

In her remarks, entitled “The Procrustean Problem with Prescriptive Regulation,” Ohlhausen urged regulators of technology, whether at the FTC or the Federal Communications Commission, to embrace regulatory humility and to focus attention on evaluating and addressing consumer harm. “By focusing on practices that are actually likely to harm consumers, the FTC has limited its forays into speculative harms, thereby preserving its resources for clear violations,” Ohlhausen said. “I believe this self-restraint has been important to the FTC’s success in tackling a wide range of disparate problems without disrupting innovation. I think this is a model worth replicating.”

Ohlhausen also warned of the challenges of using ex ante approaches to regulate a fast-evolving technology like the Internet. “The FCC has traditionally regulated the communications industry using prescriptive ex ante regulation,” the commissioner noted. This approach can lead to negative consequences, including hindering innovation.

Ohlhausen also identified three knowledge-gathering challenges raised by prescriptive ex ante regulation: (1) a regulator must acquire knowledge about the present state and future trends of the industry being regulated, and must collect more detailed information the more prescriptive the regulation, and the more complex the industry; (2) collecting such information is very time consuming, if it is even possible, because such knowledge is generally distributed throughout the industry and may even be latent; and (3) collected knowledge can quickly become stale in fast-changing technological fields like telecommunications.

According to Ohlhausen, the FTC’s ex post, enforcement-centric approach is less affected by the systemic knowledge problems of the FCC’s prescriptive ex ante rulemaking approach. “With our array of enforcement, education, and research tools, the FTC is well equipped to advance its competition and consumer protection mission online, even in the face of constant change,” the Commissioner concluded.

Noting that the FTC was not perfectly equipped, she called for an update to the communications laws to remove the exemption for common carriers from FTC jurisdiction.

“The common carrier exemption to our jurisdiction means that these competing technologies face disparate regulatory regimes through an accident of history,” Ohlhausen said. “This exemption also frustrates effective enforcement with respect to a wide variety of activities—including privacy, data security, and billing practices—and should be removed.”

News: Antitrust ConsumerProtection FederalTradeCommissionNews