WASHINGTON D.C. — Today, the FCC voted to issue proposed privacy rules to govern the privacy and data security practices of broadband ISPs. These areas had been regulated by the Federal Trade Commission, but the FCC’s 2015 Open Internet Order stripped the FTC of its jurisdiction by reclassifying broadband ISPs as common carriers (under Title II), which are excluded from the FTC’s otherwise-general consumer protection jurisdiction.
“You never let a serious crisis go to waste. And what I mean by that it’s an opportunity to do things you think you could not do before.”
– Rahm Emanuel, White House Chief of Staff, 2009
“The FCC has invented a privacy crisis, then exploited that crisis to claim vast new powers,” said Berin Szoka, President of TechFreedom. “Even if the FCC had imposed the less draconian form of Title II it had originally contemplated when it scurried to comply with President Obama’s instructions — reclassifying only sender-side transmissions — it would not have created a regulatory vacuum: the FTC could have continued regulating consumer privacy issues. But reclassifying everything meant stripping the FTC of jurisdiction — and thus having to regulate privacy. But the FCC didn’t just fill the gap: it fundamentally changed how ISPs are regulated, without any sound justification for imposing heavier burdens on ISPs than on edge companies.”
“But the real story here isn’t imposing selective opt-in burdens on ISPs, it’s the boundless legal authority the FCC has claimed,” continued Szoka. “Essentially, the FCC is replicating the FTC’s unfairness and deception authority — but without the underlying legal requirements that constrain the FTC’s discretion, or at least shame the FTC into better justifying its interventions. The FCC’s 2014 reinterpretation of Section 222(a) as granting the agency broad discretion to decide what privacy and security practices are reasonable is simply absurd. Why would Congress have needed to write the rest of the Section? But it’s about as absurd as the FCC’s 2010 reinterpretation of Section 706 as a granting the agency broad discretion to do whatever it asserts will somehow promote broadband deployment (that Congress hasn’t specifically barred the FCC from doing). Together, combined with the FCC’s broad interpretation of Section 201(b), the FCC will have carte blanche to regulate data use however it sees fit. There is every reason to think the FCC will be even more successful than the FTC at avoiding judicial review as it builds a ‘common law of consent decrees’ and uses informal guidance to bypass rulemaking safeguards. In short, the only limit upon the FCC’s discretion will be what it thinks it can get away with — until the next manufactured ‘crisis.’”
“The rush to get the NPRM out the door is astounding,” concluded Szoka. “The D.C. Circuit may rule any day on the legality of reclassification. That decision could upend much of the FCC’s proposed approach, especially if the court upholds reclassification of wireline broadband but blocks reclassification of wireless. Obviously, Wheeler is simply trying to get out ahead of the court. Expect him to pivot from ‘We must regulate because the FTC can’t’ to ‘We must regulate because we can do it better than the FTC’ in order to justify regulating wireless broadband even if the FCC loses on reclassifying wireless — based purely on Section 706, not Title II. That would mean privacy activists would still be able to get what they want from the FCC, even though the FTC would still have jurisdiction. But it would mark the beginning of what is probably inevitable: the FCC clearly exercising the vast powers it has claimed under Section 706. If so, Silicon Valley should watch out. The FCC will come for edge providers next.”