Washington Crams Before Spring Break

With a two-week Spring Recess looming, Washington communications policymakers were busy this week. Here’s some highlights.

FTC Privacy Report
On March 26, the Federal Trade Commission released Protecting Consumer Privacy in an Era of Rapid Change: A Proposed Framework for Businesses and Policymakers, a report setting forth best practices for businesses to protect the privacy of American consumers and give them greater control over the collection and use of their personal data. In the report, the FTC also recommends that Congress consider enacting general privacy legislation, data security and breach notification legislation, and data broker legislation.

The report calls on companies handling consumer data to implement recommendations for protecting privacy, including:

  • Privacy by Design - companies should build in consumers' privacy protections at every stage in developing their products. These include reasonable security for consumer data, limited collection and retention of such data, and reasonable procedures to promote data accuracy;
  • Simplified Choice for Businesses and Consumers - companies should give consumers the option to decide what information is shared about them, and with whom. This should include a Do-Not-Track mechanism that would provide a simple, easy way for consumers to control the tracking of their online activities.
  • Greater Transparency - companies should disclose details about their collection and use of consumers' information, and provide consumers access to the data collected about them.

Over the course of the next year, FTC staff will work to encourage consumer privacy protections by focusing on five main action items:

  1. Do-Not-Track - The FTC commends the progress made in this area: browser vendors have developed tools to allow consumers to limit data collection about them, the Digital Advertising Alliance has developed its own icon-based system and also committed to honor the browser tools, and the World Wide Web Consortium standards-setting body is developing standards. The FTC will work with these groups to complete implementation of an easy-to-use, persistent, and effective Do Not Track system.
  2. Mobile - The FTC urges companies offering mobile services to work toward improved privacy protections, including disclosures. To that end, it will host a workshop on May 30, 2012 to address how mobile privacy disclosures can be short, effective, and accessible to consumers on small screens.
  3. Data Brokers - The FTC calls on data brokers to make their operations more transparent by creating a centralized website to identify themselves, and to disclose how they collect and use consumer data. In addition, the website should detail the choices that data brokers provide consumers about their own information.
  4. Large Platform Providers - The report cited heightened privacy concerns about the extent to which platforms, such as Internet Service Providers, operating systems, browsers and social media companies, seek to comprehensively track consumers' online activities. The FTC will host a public workshop in the second half of 2012 to explore issues related to comprehensive tracking.
  5. Promoting Enforceable Self-Regulatory Codes - The FTC will work with the Department of Commerce and industry stakeholders to develop industry-specific codes of conduct. To the extent that strong privacy codes are developed, when companies adhere to these codes, the FTC will take that into account in its law enforcement efforts. If companies do not honor the codes they sign up for, they could be subject to FTC enforcement actions.

Initial reaction to the report was positive. Jeff Chester of the Center for Digital Democracy called it a step forward and said, “the FTC's call for ensuring the public has greater control over how their data is collected and used online, should prompt industry leaders to rethink how they address protecting consumer privacy.” But the Information Technology and Innovation Foundation called the proposals “misguided.” Retailers and direct marketers are opposed to the Federal Trade Commission's new customer protection recommendations for online transactions. Both groups say companies -- not customers -- should decide how long, and which, electronic consumer data is stored. The Direct Marketing Association said there is no harm in companies providing their customers with marketing that is customized to their interests.

On March 29, the House Subcommittee on Commerce, Manufacturing, and Trade held a hearing to discuss the FTC privacy recommendations and those put forth last month by the National Telecommunications and Information Administration. “I am highly skeptical of Congress’ or a government regulator’s ability to keep up with the innovative and vibrant pace of the Internet without breaking it. Consumers and the economy as a whole will not be well served by government attempts to wrap the web in red tape. And we cannot ignore that Internet companies have a strong incentive to protect their users – it’s called consumer choice,” said House Commerce Committee Chairman Fred Upton (R-MI). “Before we do any possible harm to the Internet, we need to understand what harm is actually being done to consumers. Where is the public outcry for legislation? Today, I’m simply not hearing it. I haven’t gotten a single letter from anyone back home urging me to pass a privacy bill. That may change – and it probably will – if industry doesn’t come up with better safeguards for consumers in the future. But right now, we should resist the urge to ‘rush to judgment’ because we feel a compelling need to do something – even if we’re not exactly sure what that should be,” said Chairman Bono Mack.

House Votes for FCC Reform
While the FTC was asking Congress to work on privacy protections, the House was passing legislation that would require the Federal Communications Commission to do more study and require more public input before releasing regulations, and weaken the FCC's ability to dictate the terms of mergers between communications mergers.

The Federal Communications Commission Process Reform Act (HR 3309):

  • Prohibits the FCC from issuing a notice of proposed rulemaking unless it provides at least 30 days for comments and an additional period of at least 30 days for replies.
  • Requires such notice to include: (1) an identification of a notice of inquiry, a prior notice of proposed rulemaking, or a notice on a petition for rulemaking issued by the FCC during the preceding three-year period of which such notice is a logical outgrowth or an identification of a court order during the preceding three-year period in response to which such notice is being issued; or (2) a finding that the proposed rule or amendment will not impose additional burdens on industry or consumers or that good cause exists that a notice of inquiry is impracticable, unnecessary, or contrary to the public interest.
  • Requires further that such a notice include: (1) the specific language of the proposed rule or amendment, and (2) proposed performance measures in the case of proposals to create or substantially change a program activity.
  • Prohibits the FCC, subject to exceptions, from adopting or amending a rule unless the specific language is a logical outgrowth of the language included in a notice of proposed rulemaking and such notice was issued during the three-year period preceding the adoption or amendment.
  • Requires the FCC, before adopting or amending a rule that may have an economically significant impact, to: (1) analyze the specified market failure, actual consumer harm, burden of existing regulation, or failure of public institutions that warrants the rule or amendment; and (2) determine that the benefits justify its costs.
  • Prohibits the adoption or amendment of rules that create or substantially change a program activity unless the order contains appropriate performance measures.
  • Directs the FCC to establish rules for: (1) Commissioners' deliberations including procedures for initiating agenda items and approving orders; and (2) the publication of the status of open rulemakings and all proposed orders, decisions, reports, or actions on circulation for review.
  • Establishes procedures and disclosure requirements for any closed meeting held by a bipartisan majority of Commissioners.
  • Requires the FCC to establish deadlines for any FCC order, decision, report, or action.
  • Prohibits the FCC, without providing an opportunity for public review, from relying on unpublished reports to Congress or ex parte FCC communications or filings under specified circumstances. Sets forth a good cause exception when publication or notice is impracticable, unnecessary, or contrary to the public interest.
  • Directs the FCC to publish on its website and in other required formats: (1) each order, decision, report, or action within seven days of its adoption; and (2) an anticipated release schedule for all statistical reports and reports to Congress.
  • Requires the FCC to notify Congress at specified time intervals when it fails to meet publication deadlines.
  • Requires biannual reports to Congress on the FCC's performance in conducting its proceedings and meeting the deadlines established by this Act.
  • Sets forth standards that restrict the FCC's authority to conditionally approve line and license transfers and other transactions. Requires any such conditional approval to be: (1) narrowly tailored to remedy a harm arising as a direct result of the specific transfer or transaction, and (2) within the FCC's jurisdiction apart from its authority to review the transaction. Prohibits the FCC from considering a voluntary commitment of a party to such transfer or transaction unless the FCC could adopt that commitment as a condition under such standards.
  • Directs the FCC to provide on its website: (1) information regarding the FCC's budget, appropriations, and total number of full-time equivalent employees; and (2) the FCC's annual performance plan.
  • Directs the FCC to complete actions necessary for the publication of required documents in the Federal Register within specified timeframes.
  • Directs the FCC to present information about consumer complaints in a publicly available, searchable database on its website.
  • Prohibits the FCC, in compiling its quarterly report with respect to informal consumer inquiries and complaints, from categorizing an inquiry or complaint under the Telephone Consumer Protection Act of 1991 (places restrictions on telephone solicitations and automatic dialing systems) as a wireline or wireless inquiry or complaint unless a wireline or wireless carrier was the subject of the inquiry or complaint.

Proponents of the measure say it is needed to prevent the FCC from interfering with the marketplace. Critics say it will gut the FCC. Writing in The Verge, TC Sottek notes that the drumbeat to reform the FCC has been rising since the agency helped block the AT&T / T-Mobile deal — and “that beat's being led by the nation's biggest carriers, their lobbyists, and Congressional Republicans who evidently want to return to the glory days of monopoly.”

But like so many bills that have passed the House, the FCC bill has no chance of being considered in the Democratic Senate. On top of that, the Obama Administration said it would veto the bill if it somehow made it through the Congress. GigaOm's Stacey Higginbotham, however, writes that the political theater is indicative of how Washington works these days.

Progress on the Digital Divide?
The Investigative Reporting Workshop recently analyzed FCC and Census Bureau data to create a map that shows subscribership rates and demographic information at the Census tract level. The findings illustrate a Digital Divide rooted in the gap between the rich and the poor. Wealthier households subscribe at a rate of 80 percent to 100 percent, while low-income areas of the city, some exceeding a 50 percent poverty rate, subscribe at a rate of 40 percent to 60 percent. The urban core of the city suffers from biting poverty and low rates of broadband subscribership, while the outer suburbs show sky-high incomes and correspondingly high rates of broadband subscribership.

The Workshop finds that broadband subscribership in rural states, particularly in the West, increased at a rapid clip between 2008 and 2010, while the South has lagged behind the rest of the nation. Southern states like Mississippi, Alabama, Arkansas and Tennessee have abysmal subscription rates, according to the analysis. While the No. 1 most-wired state is Hawaii, states in the relatively wealthy Northeast have the highest subscription rates — among them, Connecticut, New Jersey, Massachusetts, New Hampshire and Rhode Island.

In an op-ed published by GigaOm, Craig Settles argues for revamping the FCC’s Lifeline program so it moves people from government assistance into jobs. Not just any jobs, but tech-oriented jobs. He’d like to see Lifeline expanded beyond individual subsidies paid to a telecommunications carriers to include grants to local organization that work with carriers to provide comprehensive support that includes digital literacy, job skills development, internships, job placement and entrepreneurship. “By expanding the vision, modifying rules and adding requirements for participants to get jobs or become entrepreneurs, Lifeline becomes a catalyst to promote recipients to captains of their financial destiny,” Settles writes.

At the state level, however, there’s movement to end policies that have ensured access to telecommunications. Writing for the Progressive States Network, Cheryl Leanza finds that in some states (notably Kentucky, Mississippi, and Ohio), legislators are debating whether telephone service should be offered at all - leaving many observers wondering whether they would prefer to live in the 19th century, before Alexander Graham Bell's invention became ubiquitous. Arguments that alternate technologies can replace traditional telephone service leave rural advocates shaking their heads. Edyael Casaperalta of the Center for Rural Strategies, and coordinator of the Rural Broadband Policy Group, wonders, "How are these companies going to provide wireless Internet to a customer in a remote area when it requires a landline? Let's not forget many areas do not have access to wireless or other, newer technologies. This is why communities not only need access to traditional phone service, but need the chance to create their own high speed broadband networks where the private sector will not deploy it."

David Cay Johnston noted the same trend in a Reuters piece. He notes that AT&T and Verizon, the dominant telephone companies, want to end their 99-year-old universal service obligation known as "provider of last resort." They say universal landline service is a costly and unfair anachronism that is no longer justified because of a competitive market for voice services. The new rules AT&T and Verizon drafted would enhance profits by letting them serve only the customers they want. Their focus, and that of smaller phone companies that have the same universal service obligation, is on well-populated areas where people can afford profitable packages that combine telephone, Internet and cable television. Unless the new rules are written very carefully, millions of people, urban and rural, will lose basic telephone service or be forced to pay much more for calls.

“If we lose universal service,” Johnston concludes, “I doubt we will ever get it back. Let's get a balanced policy rather than quietly rewriting laws to benefit one industry.”

Finding More Spectrum for Broadband
A key recommendation of the 2010 National Broadband Plan is “The federal government, including the FCC, the National Telecommunications and Information Administration (NTIA) and Congress, should make more spectrum available for existing and new wireless broadband providers in order to foster additional wireless-wireline competition at higher speed tiers.”

On March 27, the NTIA announced its finding that 95 megahertz (MHz) of prime spectrum could be repurposed for wireless broadband use. NTIA, working with federal agencies, evaluated the potential of the 1755–1850 MHz band to accommodate commercial wireless broadband service. This spectrum band is of great interest to the wireless industry. However, over 20 federal agencies currently hold more than 3,100 individual frequency assignments in this band to perform a host of mission-critical functions, including law enforcement surveillance, military tactical communications, air combat training, and precision-guided munitions. While NTIA’s analysis shows it is possible to repurpose all 95 MHz of spectrum for commercial wireless broadband, there are several challenges that need to be met before making a formal recommendation to the FCC.

NTIA proposes a new path forward for spectrum repurposing that relies on a combination of relocating federal users and sharing spectrum between federal agencies and commercial users. Spectrum sharing will be a vital component to satisfying the growing demand for spectrum, and federal and non-federal users will need to adopt innovative spectrum-sharing techniques to accommodate this demand.

NTIA proposes convening discussions between industry and the relevant federal agencies under the auspices of the Commerce Spectrum Management Advisory Committee, with the goal of finding ways to work together through sharing or other means to reduce the time and expense of repurposing the 1755-1850 MHz band, while maintaining essential Federal capabilities and maximizing commercial utilization. [See more about how the proposal impacts the Dept of Defense and electronic news gathering.

A top lobbyist for the wireless industry said that the federal government should auction, rather than share, as much spectrum as possible. "We understand that sharing is inevitable, but the balance really needs to lean more towards clearing rather than sharing," said Chris Guttman-McCabe, vice president of regulatory affairs for CTIA - The Wireless Association. Guttman-McCabe argued that the cost of clearing some federal devices from the spectrum would "pale in comparison" to the economic boost and auction revenue of selling the spectrum to wireless companies.

But Harold Feld, legal director for consumer group Public Knowledge, praised the NTIA for emphasizing spectrum sharing. "The report's recommendation to rely on policies such as spectrum sharing and enhanced efficiency for Federal spectrum users and the accompanying technical innovations marks the first step toward a sustainable wireless future. We hope this approach will be used in the future as more Federal spectrum is identified as a resource to be shared with the public," Feld said.

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