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The Net neutrality debate rages on, Comcast announced plans to buy Time Warner Cable, and Congress gets closer to finally protecting Americans’ privacy from warrantless snooping.

FTC: Technology & Reform

The FTC is stepping up enforcement against tech companies whose designs don't meet the Commission's standards of fairness. Find out what this means for innovation and follow our events on #FTCReform.

Net Neutrality

The FCC received over a million comments on the NPRM regarding Net Neutrality. See our legal and policy comments to the FCC and follow our work to promote a free and open Internet.

Thanks, FTC, but We Don’t Need a National Nanny

“Just think about the children!” has always been the rallying cry of hyperactive regulators. Lately, the FTC claimed it was protecting children — well, actually, their parents — by second-guessing how Apple and Amazon designed their app stores. That prompted a scathing dissent from Commissioner Josh Wright, arguing that FTC enforcement action was “neither warranted nor in consumers’ best interest.”

The FTC’s been down this road before. In the 1970s, the FTC ran amuck with its vague power to declare practices unfair. The FTC chairman talked about regulating everything from funeral homes and labor practices to pollution. But Congress — a heavily Democratic Congress — wouldn’t have it. They reined in the agency, forcing it to narrow its conception of unfairness.

The straw that broke the camel’s back was the FTC’s attempt to ban advertising of sugared foods to children. This prompted a 1978 editorial from the The Washington Post, hardly a libertarian bastion, against the FTC’s overreach. That piece marked the beginning of the end of the FTC’s hyper-activist phase — and very nearly led Congress to close the agency for more than just the few days that served as the Commission’s punishment. Now that Congress is starting to look into how the FTC works again, we wanted to share the editorial:

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Here’s the the original text:

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The Internet Defies Metaphors, so Let’s Stop Using Them for “Net Neutrality”

Is the Internet a highway? Should we “preserve” its “neutrality?” Should we regulate it like the phone system? Or electricity? Or railroads?

“Net neutrality,” a conceptual metaphor, is usually explained with a slew of more concrete metaphors — from grocery shopping to airplane seating. But does this ongoing poetry slam of metaphor one-upsmanship really help?

NPR asked our own Berin Szoka. He responded:

The beauty of the Internet really is that it defies metaphor. It is constantly evolving. It’s hard to put that in a box.

Like the FCC itself, we prefer to talk about “open Internet.” Why? Because “openness” is the least static metaphor one could use. It embraces both the concerns behind net neutrality and the idea that we shouldn’t try to “preserve” the Internet of 2014. As we said in our FCC comments on net neutrality “The Open Internet,”

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FTC Cmr. Wright to Keynote Luncheon on FTC’s Use of Economics in Consumer Protection

FTC Commissioner Joshua Wright will be the keynote speaker at TechFreedom and ICLE’s latest installment in their year-long project “FTC: Technology and Reform,” launched in December. Join us on Thursday, July 31 at the Woolly Mammoth Theatre Company for a lunch and panel discussion on the important questions surrounding the FTC’s latest consumer protection enforcement actions. RSVP here.

Background

The FTC recently issued a complaint and consent order against Apple, alleging its in-app purchasing design doesn’t meet the Commission’s standards of fairness. The action and resulting settlement drew a forceful dissent from Commissioner Wright, and sparked a discussion among the Commissioners about balancing economic harms and benefits in Section 5 unfairness jurisprudence. More recently, the FTC brought a similar action against Amazon, now pending in federal district court.

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Highlights from Net Neutrality Comments Filed by TechFreedom and ICLE

On Friday, TechFreedom and the International Center for Law & Economics (ICLE) filed joint comments with the FCC, explaining why the FCC has no sound legal basis for micromanaging the Internet and why “net neutrality” regulation would actually prove harmful for consumers. Below are some of the highlights from the filing, the longest filed.

The following quotes are from the joint filings:

Proposed regulations would outlaw innovative business models, harming consumers.

  • “A truly open Internet would preserve for all players the right to experiment with innovative content delivery methods and business models.”

  • “It isn’t hard to imagine myriad business models that could be prohibited under a pure net neutrality framework.”

  • “The [economics] literature directly contradicts the assumption that neutrality improves consumer welfare or encourages infrastructure investment. In fact, the opposite appears to be true, and non-neutrality actually generally benefits both content providers as well as consumers.”

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Rubio Bill Would Help Spur Broadband Investment

Cisco estimates that—as global Internet usage triples over the next three years—mobile broadband use will increase 11-fold over the same period. Currently, the government hoards valuable wireless spectrum for its own use, which leaves broadband providers with few options to meet the growing consumer demand for bandwidth.

Senators Marco Rubio (R-FL) and Cory Booker (D-NJ) took an important step toward addressing the spectrum cruch in introducing the Wi-Fi innovation act. The bipartisan effort would open up more spectrum for Wi-Fi services by allowing private citizens to share use of a spectrum band with smart car technologies. While the FCC allocated this band for intelligent transportation technologies years ago, they’ve been slow to take off and, regardless, there’s plenty of spectrum to share.

The bill would certainly help alleviate the spectrum crunch, but its focus on government-private sharing of spectrum could lead to inefficiencies. Gregory Vogt of the Free State Foundation prefers the approach in Rubio’s Wireless Innovation Act, which focuses on licensing spectrum for exclusively commercial use. He explains:

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TechFreedom and ICLE File Joint Comments to FCC in Defense of a Free Internet

Today, TechFreedom and the International Center for Law & Economics (ICLE) filed joint policy and legal comments with the FCC, explaining why the FCC has no sound legal basis for micromanaging the Internet and why “net neutrality” regulation would actually prove counter-productive for consumers.

New regulation is unnecessary. “An open Internet and the idea that companies can make special deals for faster access are not mutually exclusive,” said Geoffrey Manne, Executive Director of ICLE. “If the Internet really is ‘open,’ shouldn’t all companies be free to experiment with new technologies, business models and partnerships?”

“The media frenzy around this issue assumes that no one, apart from broadband companies, could possibly question the need for more regulation,” said Berin Szoka, President of TechFreedom. “In fact, increased regulation of the Internet will incite endless litigation, which will slow both investment and innovation, thus harming consumers and edge providers.”

Title II would be a disaster. The FCC has proposed re-interpreting the Communications Act to classify broadband ISPs under Title II as common carriers. But reinterpretation might unintentionally ensnare edge providers, weighing them down with onerous regulations. “So-called reclassification risks catching other Internet services in the crossfire,” explained Szoka. “The FCC can’t easily forbear from Title II’s most onerous rules because the agency has set a high bar for justifying forbearance. Rationalizing a changed approach would be legally and politically difficult. The FCC would have to simultaneously find the broadband market competitive enough to forbear, yet fragile enough to require net neutrality rules. It would take years to sort out this mess — essentially hitting the pause button on better broadband.”

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Net Neutrality Regulation is Bad for Consumers and Probably Illegal

TechFreedom and the International Center for Law & Economics have filed joint legal and policy comments with the FCC, explaining why the FCC has no sound legal basis for micromanaging the Internet—now called “net neutrality regulation”—and why such regulation would be counter-productive as a policy matter. The following summarizes some of the key points from both sets of comments.

No one’s against an open Internet. The notion that anyone can put up a virtual shingle—and that the good ideas will rise to the top—is a bedrock principle with broad support; it has made the Internet essential to modern life. Key to Internet openness is the freedom to innovate. An open Internet and the idea that companies can make special deals for faster access are not mutually exclusive. If the Internet really is “open,” shouldn’t all companies be free to experiment with new technologies, business models and partnerships? Shouldn’t the FCC allow companies to experiment in building the unknown—and unknowable—Internet of the future?

The best approach would be to maintain the “Hands off the Net” approach that has otherwise prevailed for 20 years. That means a general presumption that innovative business models and other forms of “prioritization” are legal. Innovation could thrive, and regulators could still keep a watchful eye, intervening only where there is clear evidence of actual harm, not just abstract fears. And they should start with existing legal tools—like antitrust and consumer protection laws—before imposing prior restraints on innovation.

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Join us 7/31 for a Luncheon Discussion on #FTCReform

First Apple, now Amazon: Where is the FTC Heading on Digital Consumer Protection? (RSVP)

The FTC recently issued a complaint and consent order against Apple, alleging that its in-app purchasing design doesn’t meet the Commission’s standards of fairness. The action and resulting settlement drew a forceful dissent from Commissioner Wright and sparked a discussion among the Commissioners about balancing economic harms and benefits in Section 5 unfairness jurisprudence. More recently, the FTC followed up its action against Apple with a similar action against Amazon, now pending in federal district court.

These cases raise important questions about the FTC’s consumer protection enforcement practices, especially its use of economics. How does the Commission weigh the costs and benefits of its enforcement decisions? How does the agency employ economic analysis in digital consumer protection cases generally? What can the FTC’s Bureau of Consumer Protection learn from the Bureau of Competition’s experience using economics in antitrust cases?

As we approach the hundred-year anniversary of the FTC’s formation, the proliferation of advanced consumer technology will continue to pose challenges for regulators. How should the agency approach unfairness issues in the digital age? What trade-offs are involved in second-guessing user-interface design and user-experience decisions? To what extent can and should the agency impose its own technical and design preferences on the firms it regulates?

Join TechFreedom and the International Center for Law and Economics on Thursday, July 31 at the Woolly Mammoth Theatre Company for a lunch event to discuss these important questions with top experts from the field. RSVP here.

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FTC Steps Up Meddling in User Experience Decisions, but Amazon Fights Back

Apple, Amazon, Samsung, Facebook, Google… they’re all constantly trying to outdo each other in offering users the best experience possible. Like old Dutch Master painters, they labor over every aspect of user experience (UX). In the Bay Area, “UX” is a high art.

But the Federal Trade Commission (thinks it) knows better. The FTC has started trying to dictate UX decisions — in the name of “protecting the children,” of course. Earlier this year, Apple settled an FTC enforcement action regarding Apple Store purchases that kids were able to make without their parents’ authorization.

In a unusually scathing dissent, Commissioner Wright blasted the Commission for not undertaking a serious analysis of the tradeoffs between making it harder for kids to buy apps without parental consent and ease of use for all users. It’s like the classic tradeoff over privacy notices: As any American who’s ever used a European website knows, UX takes a distant second to making sure everyone consents to everything. It’s the “Sign in Triplicate” school of design — utterly un-Apple.

Yesterday, the FTC announced that it was suing Amazon on similar grounds because, unlike Apple and the dozens of other companies that have settled digital consumer protection cases over the last 15 years, Amazon insisted on defending itself in court.

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Congress Must Make Broadband Deployment Easier

Broadband is undoubtedly a critical tool for business development, education, and countless other facets of a modern society. So why isn’t Congress talking about making broadband deployment easier?

Last year, the White House took positive steps to make “broadband construction projects along Federal roadways and properties cheaper and more efficient.” Congresswoman Anna Eshoo (D-CA) sponsors legislation that directs the DOT to “expand broadband at a fraction of the cost by including [broadband conduits] as roads are already being built.” Google Fiber released a checklist of best practices that cities can adopt to prepare themselves for new networks. FTTH (Fiber to the Home) outlines a series of steps that communities should consider to clear a path for and work with a prospective broadband provider.

There is bipartisan support for commonsense policies that would spur broadband deployment, and elected officials have helpful tools to guide them in the right direction. So, again, why isn’t Congress talking about making broadband deployment easier?

FCC Chairman Tom Wheeler and Senate Democrats have instead set their sights on state laws that restrict municipal (muni) broadband. While we appreciate their concern for the rights of local governments to attempt to create their own networks, their efforts are misguided.

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