Net Neutrality Has Sparked an Interagency Squabble Over Internet Privacy

The FTC and the FCC are arguing over who is better at protecting consumers.

As part of its net neutrality regulations, the Federal Communications Commission is assigning itself the power to ensure that Internet providers such as Comcast and AT&T protect their customers' privacy. The problem is that another agency already had that job.

The Federal Trade Commission is the main federal regulator for consumer protection and online privacy issues. And it isn't happy about being replaced by the FCC in the broadband industry.

Jessica Rich, the director of the FTC's Bureau of Consumer Protection, warned that the FCC's decision "takes an experienced cop off the beat in this important area."

"The FTC has decades of experience in consumer protection and has really worked to protect consumers in this area," Rich said.

Rich explained that she doesn't have a problem with the FCC's decision on net neutrality, but she is trying to sound the alarm about how a byproduct of that decision could leave consumers worse off. "We obviously share the goal of ensuring that consumers are protected when they use broadband, and we respect the FCC's efforts to address net neutrality," she said. "We are not objecting to the larger proposal, but we are expressing concern about this effect on us."

Maureen Ohlhausen, one of the two Republican commissioners on the five-member FTC, also argued that the FTC is a better privacy regulator than the FCC. "The FTC has had a very good track record in this space," she said. "And I'm concerned about that being put at risk."

Both FTC officials urged Congress to step in to restore their agency's authority over broadband. But that's not likely to be a popular idea with congressional Republicans unless it comes with a repeal of the FCC's net neutrality rules.

The FTC polices "unfair" and "deceptive" business practices across an array of industries. One of the limits on its authority is that it can't go after "common carriers" (essentially, companies that are treated like public utilities).

Last month, the FCC voted to classify Internet providers as common carriers in order to enact strong net neutrality rules. The agency is claiming more authority for itself, but at the expense of the FTC.

The FTC still can take action against online services such as Facebook or Google, but it won't be able to do anything if Internet providers sell their customers' private information to the highest bidder or otherwise invade their privacy.

To fill in the gap left by gutting the FTC's authority over the broadband industry, the FCC is giving itself broader privacy powers. The FCC has long had privacy rules for landline telephone companies (which were already considered common carriers), and is expanding that oversight to Internet providers.

Mark Wigfield, an FCC spokesman, said the commission may take further action to clarify how the privacy rules apply to Internet providers. Many of the rules include references that only make sense for the telephone industry, such as how providers have to manage phone numbers and call records.

"We will continue to work closely with the FTC, the Consumer Financial Protection Bureau and partners in the states on privacy issues," Wigfield said.

Laura Moy, a senior policy counsel for the the New America Foundation's Open Technology Institute, argued that the switch in regulators will mean stronger privacy protections for consumers. The FCC's regulations are "some of the strongest federal privacy protections that we have on the books," she said

While the FTC can generally only take action if a company tricks its customers, the FCC can ban certain practices. "Usually companies are in the clear under the FTC's authority if they just have a clear privacy policy and they abide by it," Moy explained. "The FCC can actually set baseline standards for what practices are ok and what practices are not."

The rules will limit how broadband providers can handle their customers' billing information (such as names and addresses) as well as their Web browsing history. Moy pointed to a recent controversy over Verizon's practice of tracking its customers' mobile Internet activity against their wishes as an illustration of why the FCC should get more involved in privacy protection.

Berin Szoka, the executive director of the libertarian group TechFreedom, predicted it won't be long before the FCC tries to expand its privacy regulations to actual websites, and not just Internet providers.

"Regulatory agencies, and especially the FCC, don't just leave large potential claims of authority lying unused," Szoka said.

In the meantime, the FCC's actions will leave companies and consumers scrambling to figure out how the new privacy regime actually works. "We're going to have years of uncertainty and litigation," he warned.