FCC OKs Proposed Privacy Rules With a Lot of Pushback

(Rob Kunzig/Morning Consult)
March 31, 2016 at 5:42 pm ET

Federal Communications Commission Chairman Tom Wheeler moved yet another of his controversial proposals forward Thursday using the agency’s Democratic majority. The commission voted on party lines, 3-2, to advance a proposed rule imposing strong privacy regulations on internet service providers.

Wheeler wants to improve how ISPs treat individuals’ privacy when the market makes customer data immensely valuable. That data can give providers and analysts a perfect picture of the details making up a person’s everyday life, and the commission’s majority thinks that’s intrusive.

The proposed rule would obligate companies to tell their customers what information they collect, how and if they share it with third parties, and how customers can change those privacy preferences.

The proposal also would allow ISPs to use consumer data to sell other communications services or share it with outside marketers in that field. But it would allow customers to opt out of those practices.

This is only the beginning. Before officials begin drafting final rules, they’ll need to wait for comments from industry members, think tanks and the general public.

It’s a controversial idea. Republicans on the commission, GOP lawmakers in the House, and even members of the broadband industry have all pushed back on the proposed rule since Wheeler previewed it in early March. The Republican commissioners were vocal about their dissent at Thursday’s meeting. The Federal Trade Commission already regulates privacy, they said.

“Online consumers should and do have uniform expectation of privacy,” FCC Commissioner Ajit Pai said. “That expectation should be reflected in uniform regulation of all companies in the internet ecosystem. That’s the model we’ve had in a decade of FTC regulatory oversight, and that’s the model that gave us an internet economy that’s the envy of the world.”

Pai called the proposal “simply a political choice.” His Republican colleague, Commissioner Michael O’Rielly, concurred, saying the proposed rule is “regulatory paternalism” and called it unwarranted because the FCC hadn’t identified any flaws in the FTC’s existing framework. He also accused the Democratic commissioners of upping the ante in tech.

“I see little reason to believe that this new regime would not impede innovation and disrupt the inner working of the internet by mandating unnecessary and, for some consumers, unwanted privacy practices,” O’Rielly said, adding that the rules would increase costs for businesses and “impair the abilities” of companies to explore new technologies.

Pai and O’Rielly note that the FTC has played privacy cop for years already for the entire internet space, and the introduction of strict and separate rules for broadband providers threatens to overly complicate compliance for those companies.

But Democratic commissioners say more needs to be done to keep internet service providers’ hands off personal information that customers should be able to keep to themselves. Democrats elsewhere in Washington praised the deal for protecting consumers from invasive practices from some broadband providers.

“Without strong privacy protections, users are therefore presented with a very challenging choice: put up with intrusive behavior from their ISPs, or stay offline,” said Sarah Morris, senior counsel and director of open internet policy at the Open Technology Institute.

Massachusetts Democrat Sen. Ed Markey also lent his support to the rules. “Consumers have the right to know what information their broadband provider is collecting, the right to say ‘no’ to its use, and whether it is shared with other companies,” he said in a statement.

The broadband industry isn’t too happy with the prospect of conflicting rules. CTIA, the industry group representing broadband providers including AT&T and Verizon Communications, said the proposed rules would make it “more complicated for consumers to exercise control over their personal data.”

“This is in stark contrast to the FTC privacy model, which has protected consumer privacy while allowing for innovation across the Internet,” Tom Power, CTIA’s senior vice president and general counsel, said in a statement.

Internet service provider CenturyLink’s senior vice president for public policy, John Jones, said his company is “extremely concerned” that the proposal’s approach isn’t balanced. “Regulatory policy on issues as important as customers’ privacy and security must apply equally to all market participants,” he said in a statement.

Comcast has already come out against the rule. They say that it could “block ISPs from bringing new competition to the online advertising market that could benefit consumers.”

AT&T noted that all businesses in the internet ecosystem abide by the same regulatory framework when it comes to privacy today, and that it’s unnecessary to add any more. “The FCC’s proposed approach would create an unlevel playing field that would limit or even prohibit broadband providers from utilizing any of the ad-supported models adopted by edge providers that have proven so popular with consumers,” Bob Quinn, AT&T’s senior vice president of federal regulatory policy, said in a statement.

USTelecom, another trade group representing AT&T and Verizon, among other companies, said the proposal fails by “espousing tentative conclusions that are not in sync with the framework that has applied for years.” The group similarly worries that the FCC’s new framework would create a strange hodgepodge of rules and would get confused with the FTC.

USTelecom is also one of the primary groups challenging the FCC for its decision to reclassify broadband service providers as common carriers in the agency’s 2015 net neutrality rules. Those net neutrality rules serve as the justification for the commission’s foray into policing those providers’ privacy practices.

A decision is expected in that case very soon. If the net neutrality rules are fully or even partially vacated, it could completely undermine the proposal the FCC voted to approve Thursday.

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