Antitrust Law Daily Wrap Up, PRIVACY NEWS: FCC’s proposed privacy rules would ‘override consumer preferences,’ Commissioner Ohlhausen says, (Apr 4, 2016)

By Greg Hammond, J.D.

The Federal Communications Commission (FCC) released on April 1 a controversial Notice of Proposed Rulemaking for “Protecting the Privacy of Customers of Broadband and Other Telecommunications Services.” The proposed rule, if finally approved, would require consumers to affirmatively “opt-in” to allowing Internet Service Providers (ISPs) to use and share certain data, a requirement that would “unavoidably reduce consumer choice,” according to remarks delivered by FTC Commissioner Maureen K. Ohlhausen at a Free State Foundation conference held on March 23.

FCC Commissioner Ajit Pai, who opposes the proposed rule, put the Notice in context. He noted that, for a long time, the United States embraced a technology-neutral framework for online privacy because the FTC applied a unified approach to all online actors. However, “The FCC tore apart that unified framework 13 months ago when it reclassified broadband as a public utility”—an action that created a “deep hole in privacy protections dug by the [FCC]” and a hole that the FCC is attempting to fill now.

Prior to the Notice’s release, FTC Commissioner Maureen K. Ohlhausen discussed her hopes that the proposed rule would analyze how it could accommodate varying consumer preferences regarding different types of data, permit future beneficial uses of data, and avoid the negative competitive effects of a disparate regulation.

However, FCC Commissioners Ajit Pai and Michael O’Rielly—who both dissented from the decision to issue the Notice—claim that the proposed rule would override consumer preferences and limit future beneficial uses of data.

The “disparate approach” the proposed rule takes “does not benefit consumers or the public interest,” FCC Commissioner Pai stated. “My position on this issue is pretty simple. Online consumers should and do have a uniform expectation of privacy. That expectation should be reflected in uniform regulation of all companies in the Internet ecosystem. That’s the model we had during a decade of FTC regulatory oversight; that’s the model that gave us an Internet economy that’s the envy of the world.”

O’Rielly argued that the FCC lacks authority in the first place to regulate broadband privacy practices. He also noted that, contrary to the FTC’s choice framework, the FCC’s proposed rule “seeks to override consumer preferences with the [FCC’s] own policy choices.” In addition, O’Rielly believes that the “opt-in regime, in particular, will impair the ability of companies to develop new uses for information—cutting them off before ever exploring the possibilities and positives in the marketplace—that could provide additional revenue streams and that consumers might find beneficial.”

The proposed rule “is also unwarranted given that the FTC framework had protected broadband consumers’ privacy until reclassification removed that authority,” O’Rielly wrote. “The Notice does not identify any flaws in that framework that would require a different approach here. The only answer seems to be that the FCC is seizing the chance to up the ante, whether consumers want it or not, in order to be seen as the true defender of consumer privacy.”

News: Privacy FederalTradeCommissionNews