The FCC Grabs for More Power

The Federal Communications Commission (FCC) has created its own growth industry. The FCC keeps busy with inquiries and rulemakings for spectrum auctions, set top box sharing, special access circuit pricing, network neutrality, the invention of new telecommunications entitlements, and most recently the concoction of consumer privacy rules for Internet service providers (ISPs).

The FCC’s new privacy rules are being proposed in competition with the successful track record of the Federal Trade Commission (FTC). The FCC already regulates use of “customer network proprietary information” (CPNI) which includes name, calling and called numbers, time and duration. Carriers may not reveal or use CPNI except for marketing their own services to their customer. Without consumers’ affirmative permission, the FCC’s new rules will inhibit ISPs from using customer information for targeted advertising.

This expansionary move by the FCC covering Internet access from companies such as cable and wireless firms will be brought up at an FCC meeting this month, where they are likely to receive preliminary approval.  The rules do not apply to information providers such as Facebook and Google, who are by far the most frequent culprits in targeted advertising operations that collect, store and analyze customers’ personal information.

While the distinction between an information provider and an ISP may seem crystal clear to a regulator, the more salient issue to a consumer is whether personal information is used to deliver a targeted advert.  Whether the advert is inserted by the ISP or by an information service provider is a secondary issue.  Regulations on the use of personal information should apply to all Internet advertisers.  Consumers deserve to have an affirmative say in the use of their personal information, including where they browse on the Internet.

As it stands today, Forbes.com requires visitors to accept adverts or stay away from the site. Wired.com requires either a subscription or toleration of adverts. Ad blockers are not tolerated. Google and Facebook serve targeted adverts to visitors. They seem to allow no consumer choice in that matter. These information providers use cookies and tracking software to compile the user behavior profiles that help advertisers select and deliver the most effective adverts for each person.  None of these invasive adverts would be curbed by the FCC’s proposed discipline over ISPs.

If the FCC’s ego cannot defer to the deeper experience in consumer privacy of the FTC, the two agencies should at least use the same rules to protect consumers.  It’s not that complicated an issue.

In order to allow for digital trade between the US and the EU, a consumer privacy arrangement is needed.  A Safe Harbor protocol had been in place, but the EU Court ruled it did not protect EU consumers.  A replacement regime called the EU-US Privacy Shield requires mutual consumer protections under agreement with US and EU law enforcement.  The FTC has been the lead agency charged with assuring US Internet providers deliver the required degree of protection.  Our relationship with Europe has been tenuous in the wake of Snowden’s revelations on NSA surveillance.  We do not need to make matters worse by tossing the FTC-FCC inter-agency privacy spat into the mix.

The FCC’s sudden arrival on the targeted advertising scene leaves us wondering why they are in a hurry to expand their authority.  Perhaps it is meant to signal they are consolidating their Title II spoils.

In early 2015, the FCC declared that it would govern ISPs under Title II of the Telecommunications act of 1934.  That was a Draconian demotion after a decade of successful and lighter regulation under Section 706 rules.  In the FCC’s thinking, a Title II classification allows imposition of Net Neutrality rules on Internet service providers.  Those rules “ban paid prioritization, and the blocking and throttling of lawful content and services.”  Curiously, Net Neutrality does not ban charging for higher speed Internet access – such as charging more for 100 Mbps than for 25Mbps – even when the two speeds ride the same pathways.  Clearly to deliver 100 Mbps requires dispatching bit packets at higher priority than does delivering bit packets at 25 Mbps.

The FCC’s versions of Net Neutrality rules have twice before been struck down in Federal court.  The FCC chose make a third try by applying a cosmetic fix –reclassifying ISPs as Title II entities under the Telecommunications Act of 1934.  Title II is where carriers’ price- and speed-controlled services are held.  Despite the FCC’s attempted sleight of hand, another court challenge to Net Neutrality is already underway in the Federal Appeals Court in DC.  This third verdict is expected in imminently.  If the FCC loses again, it will need to abandon its pretensions on Net Neutrality and on targeted advertising rules.

Protections for consumer’s personal information use in Internet advertising should be effective and consistent across all the platforms.  There is no consumer advantage from balkanized regulatory regimes.  For the sake of efficiency, effectiveness, and continuity, the FTC should continue as the lead agency for enforcing consumer privacy protections.  If the FCC finds itself without a full unit of constructive regulating to do, it should volunteer to help the FTC.

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