Congress Will Decide Extent of FTC's Authority to Regulate Broadband Privacy, Say Experts

In March, House Digital Commerce and Consumer Protection Subcommittee Chairman Bob Latta, R-Ohio, introduced HR-1754 that would restore some ISP oversight to the FTC. That oversight was taken away by the 9th U.S. Circuit Court of Appeals' August decision that sided with AT&T Mobility (see 1608290032). “Independent of the net neutrality discussion, the committee has a long-held belief that the FTC’s jurisdiction over non-common carrier activities should be rightfully restored," said a House Commerce Committee spokeswoman Thursday. "Regardless of how this outcome takes place -- by way of Rep. Latta’s legislation or through a formal proposal from the FCC -- we are glad to see this discussion taking place, as it ensures that the FTC remains the nation’s principal consumer protection agency.”

Sen. Richard Blumenthal, D-Conn., formally introduced his promised Managing Your Data Against Telecom Abuses (My Data) Act, which he had announced over the congressional recess as a response to the recent Congressional Review Act measure killing FCC ISP privacy rules (see 1704180054). He partnered with Sen. Tom Udall, D-N.M., and formally released the eight-page bill text, not available earlier. The My Data Act “makes sure the FTC has the authority it needs to restore consumer control and allow individuals to use the Internet without fear of invasive and intrusive practices that turn our private lives into yet another commodity on the open market,” Blumenthal said Thursday. It “will help to restore your fundamental right to privacy, protecting against invasive overreach by internet providers into information about your family, finances, and health,” Udall said.

Acting FTC Chairman Maureen Ohlhausen, a Republican, said in a statement Wednesday that Pai's announcement is a first step to re-establish her commission's ability to protect ISP customers from privacy violations and other unfair and deceptive practices. But FTC Commissioner Terrell McSweeny, a Democrat, said in a Wednesday statement that Pai's plan is "an inherently anti-consumer policy." Though Pai cited a "return of the FTC's jurisdiction over broadband" to justify the rollback, McSweeny said neither the FCC nor the FTC currently has authority over broadband privacy due to the repeal of the FCC's rules in early April (see 1704040059). "A simpler consumer protection solution exists. Congress should fully repeal the common carrier exemption in the FTC Act, and enable both the FTC and FCC to protect consumers and the openness and innovation of the internet,” said McSweeny. Ohlhausen also has long supported repeal of the common carrier exemption.

Lifting the common carrier exemption would provide some layer of privacy protection, but Ferras Vinh, the Center for Democracy & Technology's policy counsel-Open Internet Project, said in an interview "it solves part of the problem." He said both the FTC and FCC are needed to ensure that privacy and net neutrality are protected. But he said it's difficult to say how the issue will play out and it depends on what Congress wants to do. "It's difficult to read those tea leaves at this time," he said.

Vinh said Pai's proposal will ultimately be passed by the FCC and then face "a fairly significant court battle on whether or not a Title I reclassification is truly appropriate." If that's rejected, he said, it will be interesting to see what Pai's next move would be. But he said it's not worth bargaining away net neutrality protections for lifting the common carrier exemption. "I think privacy is a fundamental value regardless of whether you’re on or off the internet," said Vinh, who was counsel to Rep. David Cicilline, D-R.I., on the House Judiciary Committee. "It’s important to have as many protections as feasible and stepping back from this [FCC] regime ... as it’s been outlined so far, is a dangerous erosion of those privacies both as users of the internet and Americans more generally."

Doug Brake, senior telecom policy analyst at the Information Technology and Innovation Foundation, emailed that those raising "alarm bells" over the 9th Circuit case "are making mountains out of a mole hill." But if it proves to be a problem later "then legislation providing clarity that the common carrier exemption to the FTC Act is activities based should be a very small lift" and Congress could even repeal it wholesale, which has bipartisan support, he added.

Gus Hurwitz, an American Enterprise Institute visiting scholar and University of Nebraska assistant professor of law, said he backs lifting the FTC's common carrier exemption, but said privacy advocates want to "double dip" by having both the FCC and FTC have strong authority. He's against having two cops on the beat because it creates "duplication and confusion" with different legal standards and frameworks, he said, but it doesn't mean the two agencies can't work together to address problems that arise. The FTC, he added, should have "a clear set of rules: and be the "clear primary agency enforcing and developing those norms."

"No matter what, Congress needs to step in and get involved here" with both net neutrality and defining the FTC-FCC relationship, said Hurwitz. He said the FCC's NPRM "will create some urgency" for lawmakers to do something on the common carrier exemption whether it addresses the issue more narrowly like Latta's legislation or through outright repeal. He also said the final order will be challenged in court and may go through a year or two of litigation and the FCC is likely to prevail. He said it's a "big enough mess" with the authority, net neutrality and privacy issues that Congress understands it will need to do something. "And hopefully it's being framed up in a way that they actually will do something."

Electronic Frontier Foundation staff attorney Kit Walsh wrote in a Wednesday blog post that Pai's suggestion the FTC can enforce privacy requirements is an "empty promise ... First, the FTC can only intervene if an ISP breaks a privacy promise, and ISP lawyers are very good at avoiding enforceable promises," she wrote. Second, Walsh cited the 9th Circuit decision leaving the FTC without power over common carriers.