FCC Advances Broadband Privacy Proposal

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By Kyle Daly

March 31 — The Federal Communications Commission advanced proposed privacy regulations for broadband Internet service providers March 31 on a 3-2 party-line vote.

The commissioners adopted a notice of proposed rulemaking on the subject. Under the proposed new rules, ISPs would still be able to use basic consumer data to market communications-related services to subscribers but would have to allow those subscribers to opt out. Any other use or sharing of consumer data, such as browsing history and physical location, would require affirmative opt-in consent from consumers. Providers would also be required to inform subscribers of how any data are being used or shared, under the agency's proposal.

“Today’s proposal would give all consumers the tools we need to make informed decisions about how our ISPs use and share our data, and confidence that ISPs are keeping their customers’ data secure,” FCC Chairman Tom Wheeler said in a statement.

The proposed new regulations also would establish a general data security standard, which would require ISPs to adopt risk management and data security policies and practices and to take action in the event of a data breach. ISPs would have to notify customers and the FCC, as well as the FBI and Secret Service in the event of large breaches, within days of discovery.

‘Uniquely Burdensome.'

As expected, Wheeler and his two fellow Democratic commissioners voted to adopt the NPRM, while Republican commissioners Ajit Pai and Michael O'Rielly dissented. Speaking before the vote, Pai maintained that the proposed rules would be uniquely burdensome for ISPs, while edge providers such as search engine and online video providers collect and use what Pai said is “the most commercially valuable information about online users.”

O'Rielly said the proposal fails to learn from the Federal Trade Commission's experience and expertise in privacy oversight and goes well beyond consumer interest and preferences in defaulting to “opt-in” standards in most contexts. He suggested the proposed new standards would drive a “vicious cycle” of overregulation.

The GOP commissioners' comments echoed sentiments they have expressed in the past alongside a number of others, predominantly fellow Republicans such as FTC Commissioner Maureen Ohlhausen, and telecom industry players.

AT&T Inc. senior vice president Bob Quinn reiterated his company's opposition to the proposal shortly after the vote, saying in a statement that it would “create an un-level playing field that would” — given the disparate treatment between FTC-regulated edge providers and would-be FCC-regulated ISPs under the proposal — “limit or even prohibit broadband providers from utilizing any of the ad-supported models adopted by edge providers that have proven so popular with consumers.”

Former Democratic congressman Rick Boucher, now a partner at Sidley Austin LLP, told Bloomberg BNA before the vote that he was concerned about the proposal in more practical terms. Boucher maintained it could lead to consumer confusion over digital privacy rights, given the differing privacy standards between edge and consumer broadband providers.

Democratic commissioners disputed such arguments. Commissioner Jessica Rosenworcel noted that the rulemaking includes more than 500 questions. She contended that the FCC will continue to refine its privacy standards and the basis of any enforcement actions. Commissioner Mignon Clyburn said she intends to remain open-minded and to keep the conversation about refining the proposed rules open, but suggested such rules were important at a time when always-on, cross-device connectivity is a daily fact of life for most consumers.

Wheeler contended that the proposed rules simply apply the same standards to broadband that have long applied to telephony and are far less dramatic than the raft of opposing “assertions, allegations, and alarms” have argued.

“In the end, this proceeding isn’t about any particular company or practice,” Wheeler said in his statement. “It’s about providing baseline protections for consumers. After all, it’s our data.”

Voices immediately expressing support for the proposal included Sen. Ed Markey (D-Mass.), who said the FCC should finalize and approve “strong rules ... to protect consumers,” and the Open Technology Institute, which said the proposal would give consumers the confidence “that they do not have to ransom their privacy away in order to go online.”

To contact the reporter on this story: Kyle Daly in Washington at kdaly@bna.com

To contact the editor responsible for this story: Keith Perine at kperine@bna.com