Repeal of FCC Rules Opens the Door for New Privacy Legislation

Repeal of FCC Rules Opens the Door for New Privacy Legislation

Virtual Privacy

On Monday, April 3, 2017, President Donald J. Trump signed into law a repeal of the Federal Communications Commissions’ privacy rules. The rules, adopted last November in a partisan 3-2 vote, and proposed by then-FCC Chairman Tom Wheeler, would have placed stringent prohibitions on internet service providers limiting their collection, use, and monetization of consumer data.  This repeal now opens the door for companies like Verizon and Comcast to compete with the likes of Google and Facebook for digital advertising, an $83 billion – and growing – industry.

Prior to the FCC’s rules, internet services providers, like edge players, received oversight in their privacy practices from the Federal Trade Commission.  However, the FCC’s 2015 Open Internet Order, which reclassified broadband providers as Title II common carriers, along with a 2016 Ninth Circuit ruling prohibiting the FTC from regulating common carriers, removed ISP privacy practices from FTC jurisdiction, thereby creating a policy gap for those providers.

While privacy advocates are particularly vocal about the perceived harms created by this repeal, all is not lost. To the contrary, political winds are now pointing toward the need for congressional legislation to close the privacy loophole and provide a permanent solution for consumer protection in this space.

In the short term, select provisions in the Communications Act, like sections 222 and 631, as well as regulations upheld by state attorneys general, still impose privacy restrictions on common carriers. Likewise, an appeal of the Ninth Circuit decision, or a reversal of the FCC’s Open Internet Order could place internet service providers privacy practices back under the regulatory authority of the FTC. A longer term solution, however, seems to be passage of privacy legislation by Congress that both prioritizes consumer protection and creates a more balanced playing field between ISPs and edge providers to compete in the data marketing/analytics/online advertising space.

One of the digital world’s versions of “Hollywood’s worst kept secret” is that the majority of the internet’s nearly 1.2 billion websites use some form of display advertising/data analytics practice in order to monetize their platforms. While Google and Facebook together command 60.4% of the digital advertising market, data insights are critical for platforms across the ecosystem in establishing a greater value-add for audience engagement and revenue generation. The adage goes, “if you’re not paying, you’re probably the product,” and in many instances, consumer use of “free” services online come at the expense of some private data being exchanged.

Whether people are aware of how much information they willingly relinquish to various apps, websites, or social media services remains an unanswered question. What is clearer, however, is that consumer privacy is a complex and nuanced issue that should not be left to partisan whims and flip-flopping regulatory frameworks depending which party holds office at a given time. If, on a bi-partisan basis, congress is able to craft and pass privacy rules that both encourage greater competition between ISPs and edge players, and improves consumer protections for John Q. Public, the result will be a privacy regime from which we all, not just a few dominant companies, benefit.