Faux Compromise: FCC Broadband Privacy Framework Follows FTC Approach in Name Only

October 6, 2016

WASHINGTON—The Federal Communications Commission (FCC) today announced the outlines of the broadband privacy framework to be voted on at the end of this month. The Information Technology and Innovation Foundation, a tech policy think tank, released the following statement from telecom policy analyst Doug Brake:

The privacy framework announced today, like the Title II common carrier designation before it, sets a terrible precedent likely to reverberate throughout the Internet ecosystem for years to come. This proposed order represents one more slide down the slippery slope, away from the innovation-friendly world of flexible guidelines and effective oversight and towards a paternalist mother-may-I regime that will necessarily raise consumer costs and limit investment. Let’s be clear: This proposal is a vehement rejection of the type of U.S. regulatory oversight that has allowed U.S. businesses to thrive online and a sharp reversal from past claims that the U.S. government is committed to using multistakeholder processes for creating Internet-related policies. Instead, it would create a rigid regulatory regime and introduce a new collective action problem that would limit the use of virtually all data that can be put to economically beneficial uses.

Like many of FCC Chairman Wheeler’s last-minute policy initiatives, the FCC appears to be using poor process to push through a faux-compromise. The FCC claims to hew more closely to the tried-and-true FTC privacy framework. It does only in that the FCC plans to base its data sharing consent requirements loosely around the sensitivity of the data involved, rather than placing heightened restrictions based solely on the company holding the data.

But key departures from the FTC model negate most, if not all, of the advantages of this approach. First, the FTC offers guidelines, not regulatory mandates. The FCC’s class of “sensitive” data requiring opt-in consent is absurdly large, effectively requiring ISPs to obtain opt-in consent for any uses of consumer data—a scenario that will chill investment and diminish competition by establishing disparate privacy rules for separate segments of industry.

In addition, the FCC would force companies to ask for permission from the government before offering their broadband customers discounts for sharing of data. This paternalistic approach assumes that consumers are neither smart enough nor savvy enough to make their own choices about how to reduce their costs. 

This proposal is untenable, but it can be easily fixed. The FCC should simply require broadband providers to do what they already do: give clear notice and opt-out choice.