FTC Prepares to Take On Net Neutrality Enforcement

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By Alexei Alexis and Roger Yu

The head of the Federal Trade Commission told Bloomberg Law that her agency is ready to take on the responsibility of policing internet service providers as the Federal Communications Commission prepares to scrap existing net neutrality rules.

“We’re ready, and we have the expertise to take action,” acting FTC Chairman Maureen Ohlhausen told Bloomberg Law in a Dec. 11 interview. She added that the agency won’t be adding any new staff as they take on the additional enforcement duties.

In preparation for the change, the FTC and the FCC issued a memorandum Dec. 11 outlining how the two agencies will work together to police net neutrality after the FCC votes to undo Obama-era rules. Once the rule is rescinded, the FTC will play a bigger role in ensuring internet applications and services are available to everyone on the same terms.

The FCC voted on controversial rules in 2015 that bar ISPs such as AT&T Inc. and Comcast Corp. from blocking or slowing web traffic in most circumstances. In those rules, the FCC reclassified internet access under the Communications Act from an “information service” to a “common carrier service.” The FTC doesn’t have authority over common carrier activities, which meant the FCC rules completely removed internet access from the FTC’s jurisdiction. Prior to that, the FCC and the FTC shared jurisdiction over ISPs.

The FCC is likely to approve a proposal by GOP Chairman Ajit Pai on Dec. 14 to roll back the existing rules, effectively returning the FTC and the FCC to their prior ISP-policing activities.

Under the memorandum of understanding outlining their new relationship on ISPs, the FCC will review complaints about whether broadband providers are complying with disclosure obligations in a transparency rule. The FTC then will act “as appropriate” against ISPs on the accuracy of disclosures and “other deceptive or unfair acts or practices involving their broadband services,” the two agencies said.

Multiple Ways to Enforce

Ohlhausen has tried to alleviate concerns about her agency’s ability to step in once the FCC rules are eliminated by showing how the FTC can go after errant internet providers. Open-internet advocates say the FTC doesn’t have the legal clout or the resources to take on the job of making sure ISPs treat customers and outside content providers fairly.

If a company has made promises about how it’s going to do traffic management and fails to comply, that’s a clear area where the FTC can bring a consumer protection action, Ohlhausen told Bloomberg Law.

The FTC can also enforce if ISPs behave in an anticompetitive way by, for example, foreclosing rival content in an exclusionary or predatory manner, she said.

FTC Split

The FTC’s two sitting commissioners are split on the issue. While Ohlhausen, a Republican, supports the pending FCC proposal, Democrat Terrell McSweeny opposes it.

“I think the best approach to guaranteeing an open internet is having clear rules,” McSweeny told Bloomberg Law, referring to the FCC’s Open Internet rule that Pai is about to rescind. “If we take away the clear rules, what we have left is after-the-fact enforcement.”

Most of the discriminatory conduct outlawed by existing FCC rules would likely be legal under an antitrust regime enforced by the FTC, McSweeny added.

Rep. Frank Pallone (D-N.J.), ranking member of the House Energy and Commerce Committee, is also critical of the FCC’s proposal. “Chairman Pai’s plan not only leaves consumers fending for themselves, it is now creating a bureaucratic nightmare with no one left in charge when things inevitably go wrong,” Pallone said in a statement reacting to the MOU.

Ohlhausen says the FTC has more experience policing the internet because it was involved in enforcement well before the 2015 net neutrality rule. “The MOU we are developing with the FCC, in addition to the decades of FTC law enforcement experience in this area, will help us carry out this important work,” she said in a statement. “The FTC is committed to ensuring that internet service providers live up to the promises they make to consumers.”

To contact the reporter on this story: Alexei Alexis in Washington at aalexis@bloomberglaw.com, Roger Yu in Washington at ryu@bloomberglaw.com

To contact the editor responsible for this story: Fawn Johnson at fjohnson@bloomberglaw.com, Keith Perine at kperine@bloomberglaw.com

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