Antitrust Law Daily Wrap Up, PRIVACY NEWS: FCC’s broadband privacy proposal sparks partisan debate, (Jun 15, 2016)

By Lynn Stanton,TR Daily

In statements and questions, Republican members of the House communications and technology subcommittee during a hearing on June 14 advanced the argument that the Federal Communications Commission’s broadband privacy proposals would lead to an uneven playing field in the use of consumer data by companies in the Internet ecosystems and would result in consumer confusion. They also argued that privacy protections would best be left to the FTC.

Democratic members of the subcommittee used their time during the hearing to defend the FCC’s proposal and to argue against Republican efforts in pending legislation to limit the Federal Trade Commission’s authority over privacy and other issues.

Subcommittee Chairman Greg Walden (R-Ore) said in his opening statement, "The Commission shortsightedly looks at one piece of the Internet and despite evidence to the contrary assumes that regulating it will improve privacy; the Commission shortsightedly overlooks the history of this industry and the value of innovation in ISP service offerings; and, the Commission shortsightedly overlooks the value of competition, both among ISPs and between ISPs and other online industries."

Chairman Walden added, "The impacts of these rigid regulations have the potential to disrupt an ecosystem that has flourished for years, and unfortunately, it’s consumers who will pay the price. The FCC has proposed a set of regulations that would not only single out ISPs based on faulty assumptions, it would affirmatively prevent ISPs from competing."

In his written statement, full Energy and Commerce Committee Chairman Fred Upton (R., Mich.) said that the FCC’s proposed rules "simply miss the mark. By singling out broadband providers, the FCC is feeding unbalance into the Internet economy. Until recently, the entire Internet ecosystem successfully operated under the enforcement-based privacy protections of the FTC model and I fear this new approach will reduce competition in the flourishing Internet marketplace. The FCC should hear the widely shared concerns and collaborate with industry to balance consumer privacy and innovation policy."

Subcommittee ranking minority member Anna G. Eshoo (D., Calif.) said that the arguments that the FCC is creating an uneven playing field ignore the fact that "the FCC lacks authority to regulate edge providers." As for the suggestion that the FCC proposal will sow confusion, she said, "Consider Pew Research that asked consumers how confident they were they understood what was being done with their data. Only 15% said they were. Consumer confusion is the status quo."

Rep. Eshoo added that "the irony is that Republicans on the committee are trying to gut the FTC’s authority" in FTC process reform legislation that was marked up by the committee’s commerce, manufacturing, and trade subcommittee last week.

Full committee ranking minority member Frank Pallone Jr. (D-N.J.) noted that the U.S. Court of Appeals for the District of Columbia Circuit upheld the FCC’s 2015 decision to reclassify broadband Internet access services (BIAS) as telecommunications services subject to common carrier regulation under Title II of the Communications Act, including the section 222 consumer information privacy provisions. "This decision puts the FCC’s privacy proposals on firm legal ground," Rep. Pallone said.

As for criticism of the proposed rules for applying only to BIAS providers and not to edge providers, Rep. Pallone said, "I agree that protecting consumers across the internet ecosystem is important as well. But I cannot agree with those that claim that consumers should not get privacy protections anywhere because they cannot get them everywhere. In the face of uncertainty created by a company’s privacy policies, nearly 70 percent of Internet users would prefer the government do more to protect their personal information. Consumers want more protection—not less.

"And this is where Congress has work to do. In order to address the legitimate concerns consumers have about their privacy online, we should give the Federal Trade Commission authority to adopt its own rules over websites. That would allow the FTC to craft privacy rules for websites as well," he added, contrasting this suggestion with the commerce subcommittee’s markup of the FTC process reform legislation last week. "The bill I’m talking about would effectively gut the FTC," he said.

"It’s kind of ironic that my colleagues would praise the FTC and its expertise in their privacy letter to [FCC Chairman Tom] Wheeler while at the same time advancing bills through the Committee that seek to cut the FTC’s legs out from under it," Rep. Pallone added.

Witness Jon Leibowitz, a former FTC chairman who is now co-chair of the 21st Century Privacy Coalition, whose members are communications companies, said that "ISP-specific rules do not provide clear benefits to consumers" and argued that the FCC’s proposal is "not technology neutral" since it doesn’t apply to edge providers.

Responding to question from Rep. Eshoo about the difference between the consumer-ISP relationship and the consumer–edge provider relationship, witness Paul Ohm, a professor at the Center on Privacy and Technology at Georgetown University Law Center, said that consumers can choose whether or not to interact with a specific edge provider, but that "in wide swaths of America," they have no competitive choice for broadband Internet access.

Mr. Ohm also said that "nothing in the proposed rules prevents an ISP from competing directly with a search engine," and that the proposal would not forbid any form of information sharing, but would at most require opt-in consent for some types of sharing.

Rep. John Shimkus (R-Ill) suggested that there is a contradiction between the FCC’s efforts to protect consumer privacy in the broadband privacy proceeding while requiring multichannel video programming providers to give third-party navigation devices and apps access to consumer information without subjecting the third parties to privacy regulations.

In response to a question from Rep. Bill Johnson (R-Ohio) contrasting the FTC’s lengthy proceeding to produce its privacy report with the FCC’s seeming determination "to get an order out by September or October no matter what," Mr. Leibowitz said that the FTC shouldn’t do spectrum allocation and he’s "not so sure the FCC should be doing privacy."

Rep. Jan Schakowsky (D-Ill), the ranking minority member of the commerce subcommittee but not a member of the communications subcommittee, was allowed to ask questions during the hearing. She asked Mr. Leibowitz his opinion of a provision in the FTC process reform bill approved by the commerce subcommittee, which would allow companies to use evidence of compliance with FCC guidance to prove compliance with the law, but not allow the FTC to use evidence of noncompliance with guidance to prove noncompliance with the law. Mr. Leibowitz said that in his "personal capacity" he would have concerns about the bill as described by Rep. Schakowsky, or about "anything that hamstrings the FTC."

News: Privacy FederalTradeCommissionNews