JURIST Guest Columnist Andreas Kuersten discusses the flawed reasoning of recent legislation that allows Internet Service Providers to sell customers’ personal information without their consent …

Chairman of the Federal Communications Commission (FCC) Ajit Pai and Chairman of the Federal Trade Commission (FTC) Maureen Ohlhausen begin their recent op-ed (a bull-headed defense of controversial legislation that, among other things, allows Internet service providers (ISPs) to sell customers’ personal information without their consent) with the quip that “April Fools’ Day came early last week, as professional lobbyists lit a wildfire of misinformation about Congress’s action.” Yet given the chairmens’ obstinate lack of awareness regarding ISPs and the legislation in question, it is more accurate to say that their attempt at April Fools’ Day trickery came late.

In 2015, the FCC voted to regulate ISPs (companies like Comcast, Verizon and AT&T) as “common carriers” (companies providing public telecommunications facilities and services), moving jurisdiction over these entities from the FTC to the FCC. The FTC had previously allowed ISPs to sell user data (such as their browsing history) except where users proactively opted out of such programs. Under the FCC’s oversight, ISPs were prevented from profiting off of customers’ private data without their consent. This year, however, legislation passed in both houses of Congress on party-line votes (with Republicans supporting and Democrats opposing) and was signed by President Trump on April 3rd undid the FCC’s actions and reverted ISP regulation to its previous form. Customers will soon have to proactively opt out of any programs that their ISPs put in place to sell their personal information to advertisers.

Pai and Ohlhausen’s main argument for why recent legislation is a good thing is that the FCC’s 2015 actions unfairly treated ISPs differently than Internet browser and search providers and social media companies (like Google and Facebook) who could still freely collect and market user data. The chairmen argue that since ISPs and companies like Google and Facebook have access to much of the same customer information, the “FCC’s regulations weren’t about protecting consumers’ privacy. They were about government picking winners and losers in the marketplace.”

The chairmens’ reasoning is seriously flawed for a number of reasons. The FCC’s rationale for more strictly regulating ISPs was its determination that they are common carriers akin to public utilities (i.e., companies that provide the public with necessities). In today’s Internet-centered society and economy, it’s hard to argue that Internet access hasn’t become a public necessity. Tellingly, Pai and Ohlhausen don’t challenge the importance of Internet access in today’s world. In fact, Pai is a big supporter of expanding Internet access to rural and poor areas to aid their development. This is a clear acknowledgment of the modern necessity of this resource. Pai has, however, expressed [PDF] the conviction that the Internet has become so important and successful because of a lack of regulation. But this is not an effective argument against ISPs being common carriers. Rather, it’s simply a preference for how the government can best nurture the expansion of Internet access.

In providing access to the Internet, ISPs do something very different than companies like Google and Facebook, which simply aid in one’s utilization of the Internet. In the parlance of another public necessity, ISPs are the water companies, whereas firms like Google and Facebook merely help one more effectively use the water they already have access to.

In addition, Pai and Ohlhausen are completely incorrect in saying that Americans don’t face “a unique lack of choice and competition in the broadband marketplace.” To support this claim, they put forth that “Verizon, the largest mobile broadband provider, holds only an estimated 35 percent of its market.” But this data point is completely meaningless. Verizon’s overall market share is trivial if it is the only ISP in the regions where it supplies Internet access. There is in fact a substantial lack of choice for consumers when it comes to ISPs. According the FCC’s latest Internet Access Services Report (pg. 6) [PDF], only 4% of Americans have a choice between three or more ISPs and 20% have a choice between just two ISPs if they want access to Internet download speeds of at least 25 megabits per second (Mbps) (the FCC’s benchmark for determining whether an individual has adequate broadband access). 47% of Americans are serviced by only one ISP.

Rather than coherently backing up their clearly incorrect claim that American consumers don’t lack choice when it comes to ISPs, Pai and Ohlhausen instead curiously put forth that consumers similarly lack choice when it comes to Internet search providers: “Google dominates desktop search with an estimated 81 percent market share (and 96 percent of the mobile search market).” But again, this data point is irrelevant. Google is not providing Internet access; it’s not providing a public necessity. Moreover, consumers have a large quantity of options when it comes to Internet search providers (Microsoft’s Bing, DuckDuckGo and Baidu, to name a few). The fact that they choose to use Google has no bearing on the availability of alternatives. Users can also counter tracking by Internet search and browser providers and websites by disabling the downloading of “cookies” from these sources that track user activity, and by installing ad blocker software. These actions have no effect on tracking by ISPs.

All of the aforementioned shows that the FCC was not picking winners and losers in the marketplace back in 2015, as Pai and Ohlhausen so inelegantly allege. Rather, the Commission was curtailing the degree to which ISPs, which provide a public necessity, could take advantage of a lack of consumer options to trade in customers’ personal information. The FCC instituted a much clearer and uniform regulatory structure for ISPs, replacing the unclear requirements of and ad hoc enforcement by the FTC, which will now again be the law of the land.

It is disheartening that such educated and informed individuals in such positions of power as chairmen Pai and Ohlhausen are so oblivious to the true nature of ISPs, the FCC’s previous actions, and recent legislation undoing them. Make no mistake, the law signed by President Trump on April 3rd undermines consumer privacy by allowing the monopolistic providers of a public necessity to much more freely trade in customers’ personal information.

Andreas Kuersten is a law clerk with the US Court of Appeals for the Armed Forces (CAAF). He is a frequent commentator on law and technology. The views expressed herein are solely his and do not represent those of CAAF or the US Government.

Suggested citation: Andreas Kuersten, The Hollowness of the Arguments of the FCC and FTC Chairmen Regarding Internet Consumer Privacy , JURIST – Hotline, April 6, 2017, http://jurist.org/hotline/2017/04/Andreas-Kuersten-internet-consumer-privacy.php