ISP Officials Dispute Fears on Privacy Oversight Gaps After CRA Use on FCC Rules

Capitol Hill Republicans may seek to advance a Congressional Review Act resolution of disapproval as soon as next week. House Communications Subcommittee Chairman Marsha Blackburn, R-Tenn., told us Tuesday during a taping of C-SPAN’s The Communicators that the CRA use “is fine” and is “the most expedient way” to tackle the rules (see 1702070074). “Hopefully, next week when we come back on Monday, we’ll have a resolution,” she said.

The House Rules Committee set up consideration for five CRAs next week, and none addresses the privacy rules. A GOP aide told us Thursday these are the only ones scheduled for next week. The CRA requires only a simple majority in the Senate and would nullify the rules, preventing the FCC from developing any in their place without congressional authorization. President Donald Trump would have to sign the CRA. Blackburn is considered the likely House Republican to file the resolution.

A CRA's possible use spurred opposition from Democrats and public interest groups. “The CRA is not necessary here,” said Public Knowledge Policy Fellow Dallas Harris, calling it an “extreme, untested measure” that’s “blunt” and overly extreme. Her group visited Hill offices “to raise the alarm” on the CRA, she said. PK is urging backers to contact lawmakers. The National Taxpayers Union backs using the CRA, it said earlier this week.

Industry officials and Hill Republicans call the FTC the traditional and preferred regulator of ISP privacy. That FTC role changed when the FCC reclassified broadband as a Communications Act Title II service in its February 2015 open internet order, which prevented the FTC from overseeing ISP privacy due to the trade commission’s common carrier exemption. But the CRA likely would kill the FCC rules before the agency could undo reclassification, creating a gap in time where no formal FCC rules are in place and the FTC has no ability to police behavior either. ISPs proposed alternative privacy principles last month (see 1701300055).

Section 222

Section 222 will provide the authority for the FCC to act in an interim phase, industry officials said this week. In its reclassification and open internet order, the FCC “declined to apply its existing telephone-centric rules implementing Section 222 and indicated that in the future it may adopt implementing rules that are tailored to broadband providers" but "the statutory provisions of Section 222 themselves will apply to broadband providers when the Open Internet Order goes into effect," said a May 2015 Enforcement Bureau notice about privacy. The notice gave ISPs guidance on Section 222's oversight for that interim phase, before the formal privacy rules.

Industry officials said informal authority would remain in place as a backstop after CRA nullification of ISP privacy rules through the 222 statute. A former government lawyer with ISP clients told us he expects minimal enforcement on that front from FCC Chairman Ajit Pai, expecting the authority to be necessary only in case anything egregious were to occur. He viewed two ways for privacy to return to the purview of the FTC -- either Pai possibly undoing Title II reclassification or Congress removing the FTC’s common-carrier exemption, potentially a faster option than the former. The former government lawyer sees this Section 222 scenario as a sustainable possibility for many months if not longer, with the FCC able to issue guidance in the interim. Historically, the FTC took little action in this space so the difference between any interim privacy oversight this way and what happened in years past isn't dramatic, the former government official said, suggesting Section 222 is arguably more specific than anything in FTC Act Section 5 that the authority the trade commission would act on.

A telecom industry official agreed and pointed to the ongoing oversight the FCC would have through Section 222. The telecom official noted increasing momentum for such a resolution but sees no rush -- based on the timing requirements of the CRA process, the CRA wouldn't have to be moved even as late as in March, the official said.

“Section 222 will still be there” but it’s “kind of intellectually dishonest” to hold up that statute divorced from its implementing rules, said PK’s Harris. She also questioned the real sustainability of that regulatory environment and said ISPs were “constantly complaining about the kind of ambiguity” inherent in the statute’s presence without clear rules. If the CRA did become law, “they won’t comply with Section 222,” she said, saying ISPs have never seemed content with the section. “They say, ‘We still follow the FTC framework.’ The truth is they’re going to use this as a reason to do nothing.”

Pallone, McSweeny

Killing the FCC rules “would essentially leave the cable and phone companies without any privacy regulator,” wrote Pallone and McSweeny Thursday in an opinion piece for Slate. “These companies would have free rein to track and monetize their customers’ data without offering consumers any choice of control over who gets to see their information or how it is used. Since most of us have very little choice when it comes to what broadband service we use, we will have no choice but to accept these practices in order to stay connected.”

“It’s the height of hypocrisy to suggest there would be some vestige of authority,” said Free Press Policy Director Matt Wood, citing ISP arguments that the FCC has no authority under Title II. He called the arguments “outright cynical” and part of a “shell game” that shows “just how hollow their support for privacy is.”

“The FCC would retain enforcement power after a CRA,” said Information Technology and Innovation Foundation analyst Doug Brake. “A mere enforcement advisory is a bit of a kludge, but it is a workable kludge.” He said the vagueness of the FCC 2015 advisory is “less disconcerting” under Enforcement Bureau acting Chief Michael Carowitz than under Travis LeBlanc, a chief under former Chairman Tom Wheeler known for aggressive enforcement. LeBlanc “was the driving force behind the aggressive, creative interpretation of 222(a),” Brake said. “I don’t think anyone knew what LeBlanc would consider ‘good faith compliance,’ but Pai has publicly advocated the FCC hew as close as possible to the FTC framework.” There’s “at least general sense of what would be expected” from that past FTC approach, Brake said.

ISPs should be wary if they believe they’ll get an easier overseer at the FTC, Harris warned, citing the recent Vizio settlement with the agency (see 1702060042). The FTC deemed TV viewing sensitive and requiring opt-in, showing the trade commission may “step forward” in ways more aligned with the recent FCC approach, which has rules deeming web browsing and app usage history as sensitive. “As the Vizio case demonstrates, the FTC is prepared to step in to stop unfair tracking,” Pallone and McSweeny wrote. “But absent comprehensive privacy legislation, the FTC can only step in after harm has already occurred, and it does not have the same jurisdiction over ISPs like the FCC.” Even if the FCC undoes broadband reclassification as a Title II service, Harris said the 9th U.S. Circuit Court of Appeals' ruling that the FTC lacked jurisdiction over AT&T in a data throttling case creates questions for how the trade commission would be able to wield authority. “There is no return to the FTC,” agreed Wood, suggesting the old frameworks are upended by that 9th Circuit ruling.

“We are working with our good friends in the Senate and talking with them on a daily basis on utilization of the CRA and how we would move forward on that,” Blackburn told reporters Wednesday. She told us Tuesday she believes continual privacy oversight could be maintained after a CRA’s passage.

House Commerce Committee Chairman Greg Walden, R-Ore., said the FCC rules were never in place over the last year. “As we think about all this, the marketplace seems to be working pretty well absent actual enforcement tools in the market,” Walden told reporters Wednesday. “The internet community responds pretty rapidly to bad behavior and pretty effectively.”