Privacy oversight and net neutrality

CYBERSLEUTH

While the nation's attention has been focused on investigations of possible collusion between the campaign of then-candidate Donald Trump and Russian government cyberattacks intended to influence the presidential election last year, executive-level agencies have been rapidly advancing an aggressive deregulation agenda almost unnoticed. The Federal Communications Commission, led by Chairman Ajit Pai, is no exception.

In March, the FCC blocked broadband privacy rules from taking effect that would have protected consumers from having their data collected and exploited by internet broadband service providers (ISPs). In the Matter of Protecting the Privacy of Customers of Broadband and Other Telecommunications Services, Report and Order, FCC 16-148. Later that month, the Republican majority in the U.S. Senate and House voted to repeal the FCC's order, and on April 3 President Trump signed the measure.

ISPs, which are the gateway through which every bit of data passes back and forth between a consumer's electronic device and the world, are able to collect data on consumers' activities, including the websites they view, time spent there, movies downloaded and even the physical location of the electronic device accessing websites. The ISPs can, and have, created profiles of highly personal details such as medical issues or financial problems based on a user's electronic data trail. Without the FCC's broadband privacy rules, those ISPs can once again package and sell that information to marketers with virtually no notice or restrictions (other than voluntary promises).

The FCC's broadband privacy rules were grounded on the agency's earlier decision that applied Title II of the Federal Communications Act of 1934 to regulate ISPs under the same framework as traditional telephone common carriers. 47 U.S.C. Section 201 et seq. The net neutrality rules, set forth in the FCC' Open Network Order, ensure that ISPs couldn't block or throttle, or charge additional fees to access content from unaffiliated providers. In the Matter of Protecting and Promoting the Open Internet, WC Docket No. 14-28, Report and Order on Remand, Declaratory Ruling, and Order, 30 FCC Rcd 5601.

A possibly unintended consequence of categorizing ISPs as common carriers was that the FCC gained sole jurisdiction to oversee marketing and privacy practices. This jurisdictional issue was brought to light when the 9th U.S. Circuit Court of Appeals held that the Federal Trade Commission has no jurisdiction over common carriers. FTC v. AT&T Mobility LLC, 2016 DJDAR 8990 (Aug. 29, 2016). The FTC filed a complaint against AT&T Mobility alleging that its practice of data throttling was a deceptive practice. Data throttling is a practice in which AT&T Mobility would drastically reduce the speed of mobile data for the rest of the month once a customer hit a certain threshold of data usage.

If Chairman Pai is successful in eliminating the net neutrality rules, ISPs would no longer be classified as common carriers, which would appear to clear the way for the FTC again to enforce rules on privacy and deceptive practices against ISPs. The FTC has been far more active in acting to protect consumers than the increasingly anti-regulatory sentiments of Pai and the FCC. So, ironically, by seeking to eliminate the net neutrality rules, Pai could be opening the door to more rigorous oversight of ISPs' marketing practices and privacy rules.

One has to wonder whether the FTC might investigate ISPs for deceptive practices if they block or throttle bandwidth for the delivery of content from unaffiliated providers, especially if the ISP has voluntarily promised not to do so. Or the FTC might view it as an unfair practice to throttle bandwidth when consumers are paying the ISP with the expectation that they will receive the full bandwidth paid for, without manipulation ? similar to the complaint the FTC filed against AT&T Mobility.

The FCC issued a Notice of Proposed Rulemaking on May 23, proposing to eliminate the net neutrality rules, and has set a wildly expedited schedule for it. Comments on the NPRM are due on July 17, and reply comments are due Aug. 16. Although most industry observers expect the NPRM to be quickly approved, the battle isn't over yet. A growing number of consumer groups, content providers (notably including Netflix), online merchants (including Amazon) and nonprofit associations have joined together in an effort dubbed "Battle for the Net." See www.battleforthenet.com. The coalition is planning a range of activities on July 12, just days before opening comments are due at the FCC, as part of a "Day to Save Net Neutrality," and is soliciting industry and consumers to participate.

It's too soon to know how the battle will end, but it is an interesting irony that by taking itself out of oversight of ISPs, the FCC could inadvertently be opening a window for more robust enforcement from a sister agency that has demonstrated interest in protecting consumers from unfair practices. As the saying goes, "Be careful what you ask for."