Big Cable Isn’t Happy About the FCC’s Plan to Protect Consumer Privacy

Federal regulators are moving ahead with an ambitious plan to give consumers more power over how internet service providers use their personal data, despite stiff resistance from industry groups representing the nation's largest cable and phone companies.

Federal Communications Commission Chairman Tom Wheeler outlined a proposal on Thursday that would for the first time establish clear, enforceable rules about how and when internet service providers like Comcast, AT&T and Verizon can use and share customer data for behavioral tracking and targeted advertising.

Wheeler's plan would require ISPs to obtain affirmative "opt-in" consent from consumers before using or sharing "sensitive information" such as health and financial information, social security numbers, geo-location data, web browsing history, and the content of emails or other online communications. The plan would also require ISPs to be much more transparent about what data they are collecting, how they are using it, and with whom they are sharing it.

"The bottom line is that the information you share with your broadband provider is yours," Wheeler wrote in an agency blog post.

Wheeler's proposal underscores the growing concern among public interest advocates and privacy watchdogs about the power of broadband giants like Comcast, AT&T, and Verizon to track and record everything that consumers do online, without their knowledge, for commercial purposes.

"It's bad enough that the lack of broadband competition forces Americans to pay sky-high prices," Harold Feld, senior vice president at DC-based consumer advocacy group Public Knowledge, said in a statement. "Continuing to allow broadband providers to exploit their market power to harvest our sensitive private information without even asking permission is not only anti-consumer, but blatantly unfair."

Importantly, the proposed rules would increase disclosure requirements for controversial "pay-for-privacy" plans in which ISPs offer discounts in exchange for more intrusive access to consumer data. "Consumers should not be forced to choose between paying inflated prices and maintaining their privacy," the FCC said in a fact sheet published Thursday.

For Wheeler, a former cable and telecom industry lobbyist, the broadband privacy proposal is a key component of a surprisingly pro-consumer agenda that has thrust him into repeated conflict with the corporate interests he once represented. Wheeler is currently battling Big Cable over his plan to increase competition in the video "set-top box" market. Last month, Wheeler postponed a vote on that measure, in part because of ferocious opposition from the cable industry and its political allies.

The FCC is scheduled to vote on Wheeler's privacy proposal at the agency's Oct. 27 monthly meeting, and privacy advocates are cautiously optimistic because Wheeler and his two Democratic colleagues have a 3-2 majority on the five-member commission. Wheeler also has the backing of several influential lawmakers, including Sen. Edward J. Markey, the telecom-savvy Massachusetts Democrat and longtime consumer advocate.

"Every click an American makes online paints a detailed picture of their personal and professional lives, and this sensitive information should be protected by strong broadband privacy standards," Sen. Markey said in a statement.

Wheeler's plan would push the FCC into new territory, because protecting consumer privacy online has traditionally been the purview of the Federal Trade Commission. But by reclassifying broadband companies as "common carriers" in order to protect net neutrality, the FCC assumed oversight of the privacy practices of internet service providers.

Wheeler's proposal would subject cable and phone companies to greater scrutiny than the FTC, which has the power to police "unfair or deceptive acts or practices," for example if a company violates privacy promises it made to consumers. By contrast, Wheeler's plan goes further, and identifies practices, such as sharing sensitive data without "opt-in" consent, that would be preemptively banned by the FCC.

Needless to say, the cable industry isn't thrilled about the prospect of greater scrutiny, especially from an agency it has repeatedly accused of regulatory overreach. Big Cable is particularly annoyed that the FCC's proposal only applies to internet service providers, and does not cover websites like Google and Facebook, which also collect massive amounts of consumer data.

But there's little Wheeler can do about that for the simple reason that the FCC does not have authority over so-called "edge providers" like Google and Facebook, which continue to be regulated by the FTC. The cable industry knows this, but that hasn't stopped it from complaining that Wheeler's proposal would put it at a competitive disadvantage to these Silicon Valley giants in the fast-growing online advertising marketplace.

NCTA—The Internet & Television Association, which represents cable giants like Comcast and Charter, expressed its opposition to the plan: "If the Chairman insists on advancing this approach, we would hope that his fellow commissioners would 'opt-out' and seek a result more faithful to the FTC's proven framework of protecting consumers," the group said in a statement.

Several leading public interest groups greeted Wheeler's broadband privacy proposal warmly, and criticized industry efforts to undermine it. Gaurav Laroia, policy counsel at DC-based public interest group Free Press, said in a statement that "when these companies complain, it's important to remember that the FCC's rules don't ban marketing: They just enable internet users to control whether and how their personal information can be used."