Wherefore Edge Providers? Senate Subcommittee Dives Into Proposed FCC Privacy Regs

edgeprovidersCompanies like Google and Facebook arguably have access to far more consumer data than Internet service providers. So why does the Federal Communications Commission call out the broadband guys in its privacy proposal?

The Senate Judiciary Subcommittee on Privacy, Technology and the Law addressed that question at a hearing on Wednesday.

The meeting was to discuss the FCC’s proposal that would require broadband providers to get explicit opt-in from their users before collecting and sharing most forms of consumer data, including data shared with third parties for marketing purposes.

All the top brass were in attendance, including FCC Chairman Tom Wheeler, Federal Trade Commission Chairwoman Edith Ramirez, FTC Commissioner Maureen Ohlhausen and FCC Commissioner Ajit Pai, who cast one of the dissenting opinions in the 3-2 decision in March when the FCC voted to formally approve and release the proposal for public comment.

Comments are due by May 27.

Wheeler was emphatic and unequivocal about the FCC’s reasons for focusing on ISPs, namely because the data they’re collecting doesn’t belong to them. Consumers choose to use Facebook or conduct a Google search, but they don’t have much of a choice when it comes to their ISP.

More than 55% of Americans have just one option for broadband service, which means that if they object to their provider’s privacy policy, they’re pretty much out of luck (if they want to be a citizen of the modern world, that is).

“The information the consumer generates in order for the network to function is the property of the consumer. Just because the consumer hires the network to deliver them to a service does not mean that the network can unilaterally take ownership of that information that the consumer provides,” Wheeler said. “And what a trove of information it is.”

Most ISPs say they collect everything from Wi-Fi locations and TV viewing to call and text records, web browsing and mobile app usage.

But the FCC’s approach “strangely singles out new upstarts in the concentrated market for online advertising,” said Pai.

“The 10 leading ad selling companies earned over 70% of online advertising dollars and none of them has gained this position based on its role as an ISP,” Pai said, citing Peter Swire, chief counsel for privacy under President Clinton and President Obama’s special assistant for economic policy.

ISPs may be troves of information, but so are search engines, social networks and online video distributors.

“And yet the FCC burdens one niche of the marketplace with asymmetric regulation,” said Pai. “This disparate approach doesn’t benefit consumers or the public interest. It simply favors one set of corporate interests over another.”

Which kind of sounds like he’s advocating for the FCC to try and assert regulatory power over Google and Facebook, et al. Ranking subcommittee Sen. Al Franken (D-Minn.) seized on that point.

“You don’t want these privacy safeguards for ISPs? Or you want lesser safeguards for ISPs? Or you want more for edge providers?” Franken asked. “Which direction are you going here?”

The answer is none of the above.

A little more than a year ago, the FCC took action to reclassify broadband as a common utility, thereby bringing ISPs under its jurisdiction and essentially taking the power to regulate broadband privacy away from the Federal Trade Commission.

The FCC’s move is being challenged in federal court and a decision is expected any day.

What Pai and the FTC hope is that the court will strike down the FCC’s power grab. It’s not about regulating anyone more or less, but rather about reinstituting the “lighter-touch framework that the FTC applied across the entire Internet ecosystem,” Pai said, pointing to a privacy framework developed by the White House in 2012 that called for “a level playing field for companies” and “a consistent set of expectations for consumers.”

“I would argue that the Internet economy that we have is due in part to the fact that we relied heavily, exclusively on the privacy expertise that the FTC has developed which was tailored to consumer preferences,” Pai said. “That’s a better way to go I think than the pre-emptive and proscriptive and selective approach that the FCC is proposing to do.”

Lurking behind the curtain of the entire debate is the issue of preserving net neutrality, which is arguably the core reason why the FCC made its move to expand its authority over ISPs. This expanded authority is what’s allowing the FCC to create its broadband privacy proposal.

“Previously, the FTC had successfully enforced privacy against broadband providers [and] except for the net neutrality order, the FTC would still be doing that,” said subcommittee chairman Sen. Jeff Flake (R-Ariz.).

“Given that, many wonder what justifies the new proposed rules, which are a significant deviation from the FTC’s approach and more burdensome as well. There are widespread concerns that these proposed rules are another step in the FCC’s attempt to become the policeman of the Internet.”

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