Dorgan, FTC Chief Argue Neutrality at Lively Senate Hearing

The FTC believes policy makers “should exercise caution because there’s so much that we still don’t know,” Majoras said in her lively exchange with Dorgan, the only member to attend the session of the subcommittee on Interstate Commerce. “We don’t want to squelch development,” which “regulating prematurely” could do, she said. Reporting on net neutrality, the FTC “said these are the things to think about and that there’s no evidence that discrimination is occurring or that it will occur,” she said. “An inflexible rule would prevent business models from developing that could actually be helpful.” If Internet providers don’t prioritize “movies or VoIP or other things that consumers are really starting to want over the Internet… then you're going to lose if not function, capability,” she said. The FTC “is not suggesting that there might not be a time… but to do it now… could create more problems,” Majoras said.

Dorgan disagrees sharply, he said. “I'd like to prevent a problem. Consumers will not know what they don’t have,” he said, citing the Internet’s historical openness. “I fail to ever see a downside to non-discrimination,” he said.

Oil and access to broadband are industries on which the FTC “has dropped the ball” and “failed consumers badly,” said Mark Cooper, director of research for the Consumer Federation of America. The commission “cheered” an FCC decision to allow a “cozy duopoly of telephone and cable companies to dominate the broadband access market,” he said. Majoras was “dead wrong” in the movie and VoIP example she gave Dorgan, he said: “It’s not about movies, it’s about being in favor of this movie and against the other movie.” He urged a “return to successful pro-competition policies” that would “allow the U.S. to be first leader in digital age.”

Earlier, Dorgan asked Majoras about the common carrier exemption, calling it a “gap which prevents the FTC from moving in certain areas.” Majoras said the commission “bumps up against” the provision, which exempts common carriers from FTC bans on unfair and deceptive practices and unfair methods of competition. The exemption complicates cases involving calling cards, advertising bundled services and other emerging telecom and technology issues, she said. “As communication industry players converge, their functions are changing and less and less falls under” the common carrier exemption, she said. The FTC scrutinizes a company’s activities, not its “label,” in weighing cases, she said. “That problem is going to grow as markets continue to evolve,” Majoras said. Dorgan he hopes the coming FTC reauthorization bill eliminates the common carrier exemption, he said.

Questionable mortgage loan ads online, on TV and in other media have “swamped” the Commission, Majoras said. The FTC sent warning letters to 200-plus companies, after an “Internet sweep” turned up unfair advertising practices (CD Sept 12 p14). The trend so consumed the financial services division that Majoras split that office along the lines of identity theft and lending, debt collection and credit issues, she said. The FTC has devoted much of its time to Internet and telecom issues including data security and identity theft, technology risks to consumers, telemarketing fraud and Do Not Call rule enforcement. If the FTC gets new enforcement priorities, it will need more staff, she said. But it’s hard for a “small agency” of about 1,000 to absorb new staff, she said. - Alexis Fabbri