State Attorneys General Weigh in on FCC Privacy Proposal

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By Lydia Beyoud

Sept. 12 — A Federal Communications Commission proposal to regulate how broadband internet providers collect and use customer information could preempt state laws protecting consumer privacy and create a “byzantine” regulatory landscape, 16 state attorneys general have told the agency.

The FCC should work with the Federal Trade Commission to create “harmonized enforcement and regulatory mechanisms that are technologically neutral” rather than make its own rules, the state officials said in a Sept. 9 letter obtained by Bloomberg BNA.

The FCC's privacy proposal is aimed at giving broadband subscribers more control by letting them opt-in to how their service providers can collect, share and monetize their data. Broadband providers and consumer advocacy groups have been debating the wisdom of the proposal, which the FCC may try to finalize this year.

“Consumers value their privacy and the security of their personal information, period. They do not differentiate between who has access to their information in the online environment,” the attorneys general wrote.

The state officials' stance is in line with the regulatory approach broadband providers favor, in which all facets of online privacy would be handled more akin to the regulatory approach of the FTC. Internet providers favor that approach because it would apply equally to companies such as Facebook Inc. and Alphabet Inc.-owned Google as it would for AT&T Inc. or Comcast Inc.

FCC spokeswoman Kim Hart said the agency was reviewing the letter.

ISPs aren't happy with the FCC proposal, because of its potential effect on strategies to grow new revenue streams geared at selling customers' data to advertisers, particularly on mobile devices.

The FTC has also weighed in on the proposal . In a May 27 filing, the enforcement agency said a different privacy approach for ISPs than for other entities that collect and use significant amounts of consumer data, as the FCC has put forward, would result in a “not optimal” outcome (2016 TLN 16, 7/1/16).

The FCC's proposed rules earlier this year came as unwelcome news to Verizon Communications Inc. following on its $4.4 billion acquisition of AOL in 2015. That deal was driven by the telecom giant's interest in expanding its advertising reach through AOL's mobile video and ad technology, complimented by other Verizon holdings that tap into marketing internet user data.

Verizon and other ISPs are worried that the FCC's rules could put them on an uneven playing field against advertising giant Google and other online companies that have found ways to monetize user data. Google dominates in the $151.5 billion global internet advertising industry, taking in more than $67.4 billion in revenue in 2015, according to Bloomberg Intelligence data. The second largest player was Facebook, at $17.1 billion, according to Bloomberg Intelligence data.

To contact the reporter on this story: Lydia Beyoud in Washington at lbeyoud@bna.com

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

For More Information

Text of the attorneys general letter is at http://src.bna.com/itA.

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