Reconsideration Seen Quickest Way for FCC to Change ISP Privacy Rules

Pai and fellow Republican Mike O’Rielly dissented when the FCC approved the new rules at the October commissioners' meeting (see 1610270036), the last before the election, which catapulted Donald Trump into the White House and Pai into the chairmanship. Both Republicans complained then the FCC was creating a different regime for ISPs than is faced by edge providers like Facebook and Google, companies that dominate the online advertising space. But privacy advocates said, unlike the FTC, the FCC approved rules that were tough enough to protect consumers.

“I agree that the most likely path to rolling back the broadband privacy rules is through a ruling on pending petitions for reconsideration,” said privacy lawyer Christopher Olsen of Wilson Sonsini, who worked as a staffer at the FCC and FTC. “I think that both avenues are live possibilities,” said Jim Halpert of DLA Piper, a lawyer on privacy issues who represents ISPs.

“The most straightforward path to the level playing field for all internet advertisers goes through reconsideration,” said Richard Bennett, network architect and free-market blogger. “If the FCC can harmonize ISP choice architecture -- opt-ins and opt-outs -- with edge service defaults, consumers will benefit. If the FCC can harmonize the advertising market unanimously, so much the better. Congressional resources are better spent on big picture issues such as a silo-free Communications Act and the repurposing of government spectrum.”

Congress should use a Congressional Review Act resolution of disapproval to kill the ISP privacy rules, said groups including the Americans for Tax Reform, American Commitment, NetCompetition and TechFreedom. “Congress is fully justified in rescinding these rules both because the Order lacks proper legal grounding and because of the need to ensure real consumer privacy across contexts of user experience,” said their letter Thursday to Senate and House leaders, signed by more than 20 groups. “Rescinding the Privacy Order would promote both innovation and effective, consistent privacy protections in over-the-top, application, wireless and wireline markets. It would also send a clear signal that the FCC has lost its way in interpreting the statute Congress gave it. Doing so would not create a gap in privacy protection because the FCC would retain the ability to police privacy practices of broadband companies on a case-by-case basis.”

House Commerce Committee ranking member Frank Pallone, D-N.J., said "this demand to gut the [FCC] is only the latest move and comes after ongoing attempts to hamstring the [FTC]," in a statement Thursday. "I will continue to vigorously fight against these combined efforts to harm consumers and take away their privacy and data security." Capitol Hill Republicans said this month that use of the tool, which would prevent the FCC from issuing similar privacy rules absent congressional authorization, is under discussion, with some Democrats resisting and questioning gaps in privacy oversight that could emerge, and others questioning whether the rules would make the cut among other Obama administration regulations under scrutiny (see 1701090062 and 1701100080).

The House “next week will begin repealing specific regulations using the CRA, which allows a majority in the House and Senate to overturn any rules finalized in the past 60 legislative days,” said Majority Leader Kevin McCarthy, R-Calif., in an opinion piece for The Wall Street Journal. “In the weeks to come, the House and Senate will use the Congressional Review Act to repeal as many job-killing and ill-conceived regulations as possible.” McCarthy spokespeople didn’t say whether the FCC’s rules would be targeted. Public Knowledge is petitioning against this possibility. Officials on both side see FCC action as more likely.

Industry sees reconsideration as the best avenue for attacking the privacy rules, said Public Knowledge Policy Fellow Dallas Harris. “We’ve seen [recon petitions] from the big ISPs and their trade associations, as well as lot of the big advertisers," she said. "When it comes to filing in opposition to these petitions, we plan on coming full force. There isn’t anything that is going to be left unanswered because privacy is important and if they go ahead and try to strip these rules, we’re going to make clear that Republicans’ first priority is to make sure that consumers are left protected.”

Americans care deeply about their privacy, Harris said. “We’re not going to give up the fight here,” she said. “Privacy is not a left or right idea, we just have different ideas of how to go about it.” Section 222 of the Communications Act, covering the privacy of consumer information, “exists whether the chairman likes it or not,” she said. “There’s only much [the FCC] can do to kind of repeal these rules.”

“A wide array of companies, such as Oracle and advertising trade groups among others, have asked the FCC for reconsideration,” said Roger Entner, analyst at Recon Analytics. “The FCC can reconsider recent decisions very quickly and easily, much more so than Congress. The two GOP commissioners who opposed the rules are now in the majority, which makes it quite likely that the ruling will be rolled back.”

“Perhaps now the Congressional Review Act will be used in some instances to good effect, but it hasn’t been heretofore, so I’m not holding my breath,” said Randolph May, president of the Free State Foundation. “I expect Chairman Pai will want to make curtailing the scope of the agency’s recently-adopted privacy rules a top priority and the reconsideration petitions provide a ready vehicle for doing so. I’m sure a particular focus will be on revising the rules so that they are not more stringent, especially with regard to requiring opt-in rather than opt-out, than the FTC's policies.” Congress could still focus on who should oversee privacy, May said. “There are good arguments for the FTC, with considerable expertise in this area, to handle most privacy regulation,” he said. “In the meantime, the FCC can act on reconsideration to rein in the excesses of its own order.”

“There is widespread agreement that these rules are not optimal,” said Doug Brake, telecom policy analyst at the Information Technology and Innovation Foundation. “A CRA action would probably be ideal, quick and clean, but requires floor time hill staff would probably like to spend elsewhere. I hope they are able to find the time for it, but if it falls to the commission to grant a stay and sort out broadband jurisdiction on a longer time frame, I’ll take it.”

Meetings With Pai

Meanwhile, Pai is holding a series of meetings with groups active before the FCC, which is a common practice for new chairmen. Industry officials term the meetings “social visits.” The meetings appeared to focus on Pai’s push to close the digital gap.

Wednesday, Pai met with officials from the Multicultural Media, Telecom and Internet Council, Hispanic Technology and Telecommunications Partnership, LGBT Technology Partnership and the Project to Get Older Adults onLine (GOAL), an FCC spokesman said. Pai “solicited ideas for closing the digital divide and bringing broadband to all Americans,” the spokesman emailed. “He also sought feedback on the proposals contained in his Digital Empowerment Agenda. Chairman Pai looks forward to continuing to work with these organizations and others in the days ahead to ensure that every American benefits from the promise of the digital age.”

On Thursday, Pai met with officials from the NTCA, Wireless ISP Association, Competitive Carriers Association, American Cable Association and National Rural Electric Cooperative Association, the spokesman said. Pai “emphasized that expanding broadband deployment in rural America will be a top priority for the Commission under his leadership,” the spokesman emailed. “Participants raised several ideas for closing the digital divide and expressed strong support for proposals he made as part of his Digital Empowerment Agenda. Chairman Pai pledged to continue working closely with these organizations to bring digital opportunity to all Americans.”

Officials at the meetings expressed enthusiasm afterward. President Alex Phillips said WISPA appreciated the chance to meet with Pai. It “strongly supports” Pai’s proposed digital empowerment agenda “and we look forward to helping him and others in government to implement that plan for the benefit of consumers in rural areas,” he said. “We see reducing regulatory burdens on small businesses, access to spectrum and technology-neutral [Connect America Fund] rules as key enablers to the success of the plan.”

Pai’s goal of closing the divide “aligns directly with the advocacy MMTC has engaged in for years,” said President Kim Keenan. "The cost of keeping millions of Americans disconnected in the digital age far outweighs the cost of closing the divide.” Debra Berlyn, director of Project GOAL, said that “the cutting-edge technologies the chairman wants to make available will particularly enhance the lives of diverse communities.”

NTCA "appreciated the chance to meet" with Pai "and members of his staff to talk about the opportunities and challenges of deploying networks and delivering broadband in rural America,” emailed Senior Vice President Mike Romano. “We are grateful that Chairman Pai continues to have an open door to talk with stakeholders of all kinds, and NTCA and our members who serve the most rural parts of our country look forward to continuing to work with him and everyone at the FCC to advance access to cutting-edge networks and services through his Digital Empowerment Agenda and other important initiatives.”

“Many CCA members are small businesses and want to provide robust services to their customers, and any and all efforts by the FCC to improve access, remove regulatory impediments and streamline deployment in unserved and underserved areas are extremely important," said President Steve Berry. "Chairman Pai led a great discussion today about closing the digital divide.”