House Clears Broadband Privacy Rule Rollback

Keep up with the latest developments and legal issues in the telecommunications and emerging technology sectors, with exclusive access to a comprehensive collection of telecommunications law news,...

By Kyle Daly

The GOP congressional move to roll back Federal Communications Commission privacy rules for broadband providers is part of a plan to put the Federal Trade Commission back in charge of regulating certain provider practices.

The House March 28 voted 215-205 to clear a resolution (S.J. Res 34) that would rescind the FCC’s rules requiring providers such as Comcast Corp. and AT&T Inc. to get affirmative consent, known as “opt-in,” from subscribers before collecting or selling their personal information. President Donald Trump is expected to sign it. The White House issued a statement before the vote backing the resolution, which the Senate passed last week.

Republicans are setting the stage for the FTC to eventually re-assume privacy watchdog powers over broadband providers.

“The FTC, I’ve always felt, is the proper place for this privacy regulation to occur,” House Energy and Commerce Committee Chairman Greg Walden (R-Ore.) told reporters.

The move is also the first and easiest way for GOP lawmakers to land a blow against the FCC’s 2015 decision to reclassify broadband providers as common carriers under federal law. The FCC issued related regulations, as part of its 2015 decision, on ISP network practices to foster a concept known as net neutrality.

“That’s just the beginning of the effort to get to where we can legislate in this area,” Walden said of the move’s connection to prospective legislation on net neutrality, which is also in the GOP’s crosshairs.

The FTC polices the data-handling practices of internet content companies such as Facebook Inc. and Alphabet Inc.'s Google. The agency also used to regulate the privacy practices of internet service providers (ISPs), but that changed when the FCC reclassified them as common carriers, which the FTC can’t regulate.

The Democrat-controlled FCC meant to establish clear regulations for how ISPs can collect and use subscriber data. The FCC under then-Chairman Tom Wheeler modeled its privacy rules after the FTC’s privacy standards—but expanded the opt-in category. Under FTC standards, that category includes data such as financial records and minors’ personal information. Wheeler’s FCC said ISPs need consent before they can collect and use browsing history, location data and app usage records.

“The FCC will work with the FTC to ensure that consumers’ online privacy is protected though a consistent and comprehensive framework,” FCC Chairman Ajit Pai said in a statement. “In my view, the best way to achieve that result would be to return jurisdiction over broadband providers’ privacy practices to the FTC, with its decades of experience and expertise in this area.”

Returning Privacy Enforcement to FTC

Republicans and ISPs say the FTC is already the expert agency for privacy, and that consumers and the internet ecosystem will benefit from having uniform, FTC-developed privacy standards for both ISPs and content companies.

The GOP objective, Walden and House Communications and Technology Subcommittee Chairman Marsha Blackburn (R-Tenn.) both told Bloomberg BNA, is to put the FTC back in charge of broadband privacy.

“I think that having one regulator in this space will clarify confusion, and that’s what we ought to do,” Blackburn said.

That could happen in one of two ways. Congress could move to revise the FTC’s statutory authority, ending the prohibition on regulating common carriers. Or, more likely, the FCC or Congress could reverse the agency’s reclassification of broadband providers.

One telecom industry source told Bloomberg BNA the FCC might move as soon as May to begin a rulemaking process to create new, lighter-touch net neutrality rules, including reversing the reclassification. Republican lawmakers are deferring to the FCC to act first on net neutrality, after which they hope to bring Democrats to the table on bipartisan legislation to settle the issue.

There is one wrinkle in the plan. A U.S. Court of Appeals for the Ninth Circuit ( FTC v. AT&T Mobility LLC , 9th Cir., 15-16585, decision 8/29/16 ) panel ruled in August 2016 that the FTC can’t regulate any part of a company that owns a common-carrier service. If that ruling stands, it could put the privacy practices of any ISP that also happens to have a common-carrier offering, such as traditional voice service, out of the FTC’s reach, even if broadband reclassification is reversed.

But several telecom industry sources told Bloomberg BNA that the industry and policymakers are simply proceeding as if the Ninth Circuit panel decision doesn’t exist. Regardless of the fate of that ruling, Walden said any net neutrality bill would clarify the jurisdictional morass and make the FTC the sole agency dealing with privacy protections in all parts of the internet ecosystem.

“We’d have to address that in the legislation. What we want is one framework for privacy, and it should be out of the FTC,” Walden said.

Congress passed the resolution under the Congressional Review Act, which gives lawmakers 60 legislative days after a federal regulation is published in the Federal Register to overturn it.

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

For More Information

Text of the Senate resolution is at: http://src.bna.com/nrN

Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.

Request Tech & Telecom on Bloomberg Law