Why the FCC delayed new privacy regulations for AT&T, Verizon, and Comcast

By stepping back from Obama-era privacy rules, the Trump Administration’s FCC has made another decision that’s likely to benefit internet service providers, but not internet users.  

REUTERS/Kevin Lamarque/File Photo
Federal Communications Commission (FCC) Commissioner Ajit Pai (L) and FCC Chairman Tom Wheeler testify at a House Appropriations Financial Services and General Government Subcommittee hearing on the FCC's FY2016 budget, on Capitol Hill in Washington March 24, 2015.

It’s no secret that Google, Facebook, and other websites collect reams of user data. But they're not alone: Verizon, AT&T, and Comcast are also among the internet service providers that collect data on consumers.

Last November, the Federal Communications Commission moved to restrict the latter group, specifically targeting broadband firms’ ability to collect data with a set of new privacy rules.

But now, under a new chair, the agency is changing course. On Friday, FCC spokesman Mark Wigfield announced that it would delay the implementation of those rules, a likely first step towards blocking them entirely.

The FCC rules would have required internet service providers (ISPs) – the companies whose broadband lines and wifi networks bring you the internet – to obtain user consent before using location data, health and financial information, and other personal details for advertising and internal marketing. According to Reuters, those requirements would have created an uneven playing field: Restricting firms such as AT&T, Comcast, and Verizon more than companies that simply use the internet, such as Facebook and Google.

“[FCC] Chairman [Ajit] Pai believes that the best way to protect the online privacy of American consumers is through a comprehensive and uniform regulatory framework,” Mr. Wigfield said in a statement.” All actors in the online space should be subject to the same rules, and the federal government shouldn’t favor one set of companies over another.”

Last month, ISPs welcomed Mr. Pai’s decision to scrap a “net neutrality” rule that would have required them to treat all online content equally. By stepping back from Obama-era privacy rules, the Trump administration’s FCC has made another decision that’s likely to benefit service providers, but not websites or internet users.  

By collecting your personal data, internet companies can target you with ads geared toward your interests or location. This practice drives the business of some internet firms. In the fourth quarter of 2016, Google advertising revenue totaled nearly $22.4 billion – the lion’s share of the $26 billion in revenue that Google’s parent company, Alphabet, reported.

During the same quarter, Verizon reported wireless equipment revenues of $5.4 billion, and “service and other revenue” of $28.9 billion. The company’s financial statements don’t separate the latter into advertising, broadband and cellular subscription fees, and other revenue streams. But with total online ad revenue projected to grow rapidly in coming years, it’s easy to see why ISPs would want to shore up their position in this market, and collect user data to do so.

For that reason, they took issue with the FCC’s privacy rules. In a petition filed last month, they described the rules as “the imposition of significantly more costly and onerous restrictions on ISP use of online consumer data than all other online entities.” In delaying these rules, President Trump’s FCC chair appeared to agree

The telecom industry claims to have public opinion on its side. Upon filing its petition, NCTA - The Internet and Television Association wrote in a press release that “data submitted to the FCC shows that 94% of internet users believe all companies collecting or using information online should be governed by the same set of rules.”

But US internet users may prefer those rules to be more stringent, not less. Over the past year, the rise of “smart devices” like Amazon’s Alexa and the My Friend Cayla doll have sparked concerns – and regulatory challenges – from consumer-advocacy groups.

Meanwhile, internet users in Europe enjoy expansive privacy rights under a recent data reform, including consent requirements for processing of personal data and a “right to be forgotten” which allows individuals to demand that old personal data be deleted.

Unlike US privacy laws, the EU’s personal-data regulations don’t distinguish between firms’ business models. Instead, they focus on how they handle internet user data, administering the activities of “controllers,” “processors,” and “recipients.”

The European model could mean a more even playing field for US telecom and tech companies. It also suggests a possible alternative that US privacy advocates may want to consider now that the Obama administration FCC regulations have been derailed.

Former FCC Chairman Tom Wheeler, who authored the privacy rules, made clear that he’s still concerned about Internet users’ privacy. "The fact of the matter is it's the consumer's information," he told Reuters. "It's not the network's information."

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