CEI and Tech Freedom Comments to the FCC on Protecting Broadband Customers’ Privacy
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Chutzpah, wrote Leo Rostein in his 1968 classic, The Joys of Yiddish, is “that quality enshrined in a man who, having killed his mother and father, throws himself on the mercy of the court because he is an orphan.”
On privacy, the FCC has reached new heights in chutzpah: having robbed the FTC of its “jurisdictional lunch money” over broadband,5 the FCC claimed it needed to issue broadband privacy regulations to fill a vacuum in consumer protection — and that it would simply recreate the FTC’s approach. The Chairman told the Senate Judiciary Committee the FCC’s approach “is firmly rooted in the privacy protection work done by the FTC in the exercise of the FTC’s general consumer protection jurisdiction.”
But the FCC is doing far more than simply replicating the FTC’s approach in an area that the FTC can no longer regulate (because of the FCC). The FCC is not merely replacing case-bycase enforcement of general standards with a more specific rulemaking, it is inventing new requirements based on new substantive standards that would give the FCC even more discretion than the sweeping discretion previously enjoyed by the FTC.
Most of all, it is clear that the FCC plans, in the inevitable legal challenge, to justify this bait-and-switch by throwing itself on the mercy of the court — with its usual claims of deference in interpreting (allegedly) ambiguous statutory provisions.
We believe the FCC should go back to the drawing board, revise its plans to bring its approach more in line with the FTC, and issue a Further NPRM, because full harmonization:
- Would produce better outcomes for consumers;
- Is what the Chairman had promised;
- Would restore the status quo ante reclassification;
- Would be competitively neutral, treating broadband companies differently from edge companies only when truly warranted; and
- Would ensure that there would be no substantive change in privacy oversight if the FCC ultimately loses on reclassification at the full D.C. Circuit or Supreme Court.
As the Intervenor in the legal challenge to the Open Internet Order (on behalf of Silicon Valley entrepreneurs and investors, and Cari.net, a data center and hosting provider),Tech-Freedom plans to take the case to the full D.C. Circuit for rehearing — and on to the Supreme Court, if necessary. The majority simply did not address our core arguments, that the FCC should not apply the familiar two-step test of Chevron, because the court should, at what has been called “step zero” of Chevron, decline to apply that test.9 Even if reclassification does make it to “step two,” Judge Williams amply explained why the FCC’s interpretation of the statute was the epitome of arbitrary and capricious reasoning.
If the FCC ultimately loses on reclassification, this entire proceeding will be unnecessary — because the FCC will lose authority over broadband providers as “common carriers” and the FTC will automatically regain the authority it had long exercised. Indeed, in our view, the Commission would have no authority to regulate broadband privacy whatsoever because the other statutory provisions cited by the FCC do not provide the Commission the authority it would need for this proposal.
In any event, the FCC should have waited for that litigation to be resolved at the full D.C. Circuit and Supreme Court before issuing this proposal. Having pleaded with the Commission for an extension of this deadline11 and been rebuffed, we declined to spend our limited institutional resources analyzing the complex issues raised by the FCC’s interpretation of these provisions in the initial comment round — which closed shortly before the decision was issue.
Here, we note that, if the Commission can use the provisions of Title II it cites (as well as other provisions) to regulate broadband privacy and data security, the Commission itself believes it can do so without issuing formal rules, through case-by-case enforcement that includes monetary penalties — and, indeed, has already done so. Thus, there was no vacuum in consumer protection requiring the Commission to rush to issue this proposal.
We urge the Commission to truly harmonize its approach with that of the FTC as follows:
- Use the authority the FCC claims under Title II to guide case-by-case enforcement of ISPs’ privacy and data-security practices.
- To the extent reclassification fails, desist from further action on this proceeding;
- To the extent the full D.C. Circuit and Supreme Court uphold reclassification (or simply let the panel decision stand), issue a Further Notice of Proposed Rulemaking that:
a. Makes clear the FCC will, in general, follow the same substantive standards of the FTC’s Unfairness and Deception Policy Statements, and Section 5(b) and (n) of the FTC Act;
b. Clearly grounds its analysis of proposed rules in these standards; and