By Amir Nasr
May 11, 2016 at 6:48 pm ET
Ever since the Federal Communications Commission voted on its proposal to impose new privacy rules on internet service providers in March, critics have hounded the agency for it. They say the move could create an overly burdensome regulatory system that hampers the industry’s ability to create the cool new thing.
FCC Chairman Tom Wheeler defended the privacy proposal Wednesday by touting his agency’s ability to work in tandem with the Federal Trade Commission.
“The FTC and the FCC, as recently as 24 hours ago, worked together on a privacy issue that bifurcates exactly the same way that we’re discussing here, and that’s the issue of mobile security,” Wheeler told members of the Senate Judiciary Privacy, Technology and Law Subcommittee at a hearing.
Wheeler’s comments referred to a recent announcement from the two agencies about a joint inquiry into how major mobile carriers release security updates for devices. Industry participants are concerned about the lack of speed of those security patches’ release.
“We have jurisdiction over the networks that deliver to the devices. The FTC has jurisdiction over the devices,” Wheeler said. He said the two agencies “worked in tandem as recently as yesterday.” The FCC sent a series of inquiries to mobile carriers, while the FTC sent the same questions to the manufacturers of the devices.
“They were done on a coordinated basis with us working together like this, and that’s not an isolated situation,” Wheeler added. “I think that is the kind of reality that we will see going forward, that we are responsible for networks and they are responsible for [internet services]” such as Facebook or Amazon.
Wheeler’s comments addressed two big complaints voiced often by opponents to the internet privacy proposal. Many believe that the FCC’s proposed rule, though targeted to internet service providers, could later extend to internet services known as edge providers, such as Facebook.
Republican FCC Commissioner Ajit Pai, who also testified, said the proposed rules are “elastic” enough to later encompass edge providers. Pai voted against the proposal because he believed it went too far.
FTC Chairwoman Edith Ramirez agreed with Wheeler and touted “an extensive history of cooperation with the Federal Communications Commission.” She told lawmakers about the two agencies’ joint effort to enforce a Do-Not-Call rule and against unauthorized charges on mobile phones. She also mentioned a joint project on mobile phone security. These activities show that it is effective for the two agencies to split jurisdiction between the manufacturers and the network providers.
“Our goal in working together is to use our complimentary expertise and authority to protect consumers as effectively and efficiently as possible, avoid duplication, and promote consistency,” Ramirez said. “I commend the FCC for focusing on the important issue of consumer privacy.”
She also said the FTC would be providing formal comment on the proposal.
Some telecom lobbyists are doubtful that the FCC’s involvement in privacy regulation will work. The FTC has long been policing the privacy practices of internet companies and has racked up hundreds of enforcement actions in that time.
Members of the telecom industry worry that after businesses and consumers have become used to one set of rules from the FTC, the FCC will muddle the system and make it difficult for companies to comply. All that focus on obeying the rules could detract from businesses’ ability to invest in new technologies, they argue.
Subcommittee Chairman Sen. Jeff Flake (R-Ariz.) called the FCC proposal a “significant derivation” from the FTC’s framework that will burden providers.
“First and foremost the proposed rules would impose unnecessary and static regulations on the dynamic and innovative internet ecosystem,” Flake said. “Would we have the same internet we have today if prescriptive rules such as these were imposed on it 10 years ago? I’m concerned that we would not.”
Pai said the “United States’ historic commitment to light-touch, technology-neutral regulation when it comes to internet privacy” is behind the powerful internet market that developed in the United States.
“Startups haven’t had to hire an attorney to navigate complex federal rules, and entrepreneurs have been free to invent and to discover new ways to monetize their services without the fear of government standing in the way of profitability,” Pai said. The FCC rules, he suggested, could change that.
The subcommittee’s top Democrat, Minnesota Sen. Al Franken, didn’t buy this argument. He said that the best thing for innovation is to protect net neutrality, which is the basis for the FCC’s new privacy proposal.
“What would have endangered innovation on the internet would have been to lose net neutrality,” Franken said.
The “whole point” of reclassifying internet service providers as common carriers in the FCC’s open internet rule was to preserve net neutrality, Franken said. Every time that the FCC has tried to publish open internet rules in a different way, the courts have struck them down.
Republicans and big carriers heartily disagree with the reclassification of ISPs, and the agency is currently awaiting a decision in the latest challenge of its open internet rules. If the net neutrality rules are rejected, it could knock the air out of the FCC’s current ISP privacy proposal.
Critics also say different privacy expectations for different services will hurt data protection and make regulation and oversight increasingly difficult. “These regulations will only confuse consumers and give them a false sense of security,” Flake said.
Sen. Orrin Hatch (R-Utah) concurred, saying the FCC had written a “potentially confusing and unfair set of rules for both consumers and businesses.”