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FCC vs. FTC – a new privacy turf war

The FCC is about to muscle in on the FTC’s privacy turf and the FTC is pushing back.

Since the 1999 Geocities case, the Federal Trade Commission has been the nation’s defacto privacy cop, bringing  more than 150 privacy and data security cases.  But the net neutrality order could make the Federal Communications Commission a much bigger player in privacy enforcement.

When the FCC last month reclassified the Internet as a common carrier service, it expanded Title II’s strict privacy regulations that currently govern telephone services to ISPs and mobile providers. A little known provision in FTC law called the common carrier exemption gives the FCC exclusive authority over telephone services. Now that ISPs and mobile providers are common carriers, the FTC could be cut out of a broad swath of privacy enforcement, especially since much of the privacy and data security agita today stems from online and mobile practices.

The FTC most recent enforcement actions – TracFone, AT&T, and T-Mobile – may be now out of bounds for the FTC, but fair game for the FCC. The only solution for the FTC is for Congress to change the common carrier exemption and the FTC is advocating that course.

Although the details of how the FCC will apply its expanded privacy authority to Internet services need to be worked out, it’s high on chairman Wheeler’s list. Wheeler said earlier this month during DC’s annual Tech Prom, that the commission would hold workshops beginning next month “to deal with broadband privacy issues for the newly classified telecommunications service providers.”

Depending on how far the FCC goes, the commission’s new privacy authority could reach to Do Not Track, data collection and mobile app privacy.

“It could divest the FTC of a lot of authority. It’s sort of a blank check,” said Bob Corn Revere, a partner with with Davis Wright Tremaine, who represents the Association of National Advertisers.  The ANA  is holding its annual advertising law and public policy conference beginning Tuesday and FCC’s new enforcement authority is on the agenda.

Compared to the FTC’s current authority, the FCC’s new privacy authority under Title II potentially has more teeth. Unlike the FTC which can only extract redress for consumers, the FCC has a full range of penalties open to it including monetary penalties.

“Section 222’s privacy protections…are certainly more explicit than the privacy rules the FTC enforces through the deceptive practices prong of Section 5,” said Justin Brookman, director of the consumer privacy project for the Center for Democracy and Technology.

Although the FTC has carefully avoided giving a position on the FCC’s overall net neutrality order, the commissioners haven’t shied away from raising questions about how Title II might unwind two decades of FTC case law.

“It could implicate our privacy enforcement, it could implicate all of our enforcement,” said Commissioner Maureen Ohlhausen. “I question the wisdom of cutting the FTC, which has shown itself active and vigilant, out of the picture. The FCC hasn’t been an enforcer,” she added.

Throughout last week’s flurry of net neutrality hearings, FTC commissioners took every chance to tell lawmakers it is time to retire the common carrier exemption.

“The optimum outcome for consumers is open Internet coupled with repeal of the common carrier exemption that may hinder the FTC from protecting consumers against unfair and deceptive common carrier activities,” FTC commissioner Terrell McSweeny told the House judiciary committeelast week.

FTC chairwoman Edith Ramirez is less certain about just how much effect the FCC’s move will have on the agency’s authority, but she has repeatedly called for the exemption to be lifted.

“I share chairman Wheeler’s goal of ensuring an open Internet,” she said. “Although reclassification of broadband services as common carrier services will not affect the majority of our online consumer protection initiatives, I think it is time to repeal the outdated rule,” Ramirez said.

Even Wheeler last week told lawmakers that getting rid of the common carrier exemption was “definitely worthy of review,” by lawmakers.

Privacy and consumer groups are already looking forward to an agency that can go beyond enforcement to actually writing new rules to govern consumers’ privacy online and on mobile devices.

“The FCC is a much stronger and better place to put [privacy regulations],” said John Simpson, privacy project director for Consumer Watchdog. “This gives the possibility of actually developing really good protections,” he added.

The FCC has already shown it is interested in stepping up its enforcement bureau with new FCC enforcement chief Travis LeBlanc on board. Last week the FCC imposed its largest fine ever on a TV station for a single broadcast indecency violation. And given LeBlanc’s experience in the California Attorney General’s office, which has set the bar for privacy enforcement in the U.S., the word around DC is that the FCC sees privacy as a big part of its public interest responsibility.

As Wheeler said at the Tech Prom: “Privacy is not a secondary activity here.”