‘Walk Slowly’ on Privacy Legislation, FTC Comr. Says

The govt. should “walk slowly” when it deals with complicated technology issues, Swindle said. He mentioned a recent FTC workshop in which the participants couldn’t decide on a definition of spyware: “If you make that blanket wide enough, you could make it legal or illegal” and threaten legitimate businesses whose activities are on the edge of the definition. Cookies were the big concern 5 years ago, Swindle said, and after companies designed software to allow users to reject each cookie as it came in, “we learned it was cumbersome” to review cookies individually and the concern faded.

As e-commerce and the threat from spyware and phishing grow, the govt. needs to take appropriate measures, Swindle said: “If we don’t, we're going to start diminishing people’s confidence in the Internet.” But the impulse to legislate should be resisted, he cautioned: “We don’t feel that our efforts have been retarded by the lack of authority.” He compared an agency’s job of interpreting poorly written legislation to his combat experience flying through the turbulence created by planes in front. Instead of forcing software makers to repeatedly warn consumers what their products do, Congress should help FTC and other agencies expand law enforcement operations against bad actors, Swindle said. He supports the International Consumer Protection Act, which would allow cross-border information sharing on consumer fraud and give the FTC powers similar to the SEC, but “it’s not being taken very seriously” in Congress, Swindle said.

Swindle specifically warned Congress to think carefully before legislating what is required of companies that collect personal information from consumers. He said the “opt-out” provision in the Gramm-Leach-Bliley Act of 1999, in which consumers must ask companies to de-list their information, did not lead to many consumer requests. Now that Congress would rather institute an “opt-in” system where companies must get permission from consumers to use their information, “the results could be catastrophic” for the information-sharing economy, Swindle said. “There’s a place for opt-in,” Swindle clarified to us after the briefing, but “we have to be careful about saying ‘do this’ everywhere.” He added the CAN-SPAM legislation “hasn’t done a damn thing.”

Software companies and ISPs already make products, many of them free, to help consumers protect their information, and 50-60 congressmen link to the FTC’s website from their own, Swindle said. The “massive problem” is consumer ignorance of easy security measures, such as turning on automatic security updates for their computers, Swindle said: “Consumers have to think that… laws can’t solve all these problems” and their duty to protect themselves needs to be “baked in.”

The regulatory environment and future of VoIP were addressed by Lawrence Spiwak, Phoenix Center pres. Most people don’t know there are 2 kinds of VoIP, public and managed, Spiwak said. Public VoIP includes Skype and routes information packets anywhere it can find, which is “very inefficient use” of the IP network, and “tunneling” the packets through the same channels takes up too much bandwidth, Spiwak said. Managed VoIP, including Vonage and AT&T’s CallVantage, is the “future of telecommunications” because it carefully directs the packets across the entire network, maximizing efficiency and call quality, Spiwak said.

Once VoIP makes a stronger challenge to the traditional phone network, govt. might wrongly consider regulating it as a common carrier, applying Universal Service Fund fees and access charges, which bring in $26 billion each year, Spiwak said. VoIP’s current status as an information service, though, prevents it from having interconnection rights, Spiwak said. He explained that Vonage’s complaint about getting cut off by another carrier wasn’t technically illegal. The question is not whether the FCC will regulate VoIP, but when, and the resulting rules will be “worse than the tax code,” Spiwak said.