FCC Zooms In On Net Private Parts

Agency’s review of broadband privacy spotlights care and handling of customer information

Why This Matters

WHY THIS MATTERS
How the FCC regulates privacy will affect how ISPs can use and monetize customer info.

The FCC is focusing on private parts. No, the commission is not cracking down on indecency as it did a decade ago. The parts in question are the aspects of its regulatory purview, or its interpretation of that authority, as it pertains to broadband privacy. That includes the agency’s new authority over broadband customer privacy, its extension of privacy protections to programming streams on set-tops, and only its second enforcement action under enhanced transparency rules.

FCC chairman Tom Wheeler last week circulated his proposal for how an ISP should treat customers’ information, such as what websites they visit or how their information is being used, and it includes an opt-in regime for most targeted advertising. ISPs already are required to protect CPNI (customer proprietary network information)—like VOD records—for traditional video service.

Cable operators and other ISPs have offered up a proposal to the FCC. The framework is based in the National Cable & Telecommunications Association’s argument that rather than come up with new rules and regs, the FCC should “[pursue] reasonable enforcement actions against telecommunications service providers that have clearly violated these principles.” That is the Federal Trade Commission model. The FTC has enforcement authority but very limited authority to promulgate new regulations.

ISPs do not concede that the FCC even has the authority to regulate broadband CPNI, which is tied to the Open Internet order they are challenging. But they had wanted the FCC to steer clear of new rules, and that doesn’t look like it is happening. (ISPs have argued that targeting them ignores the power of edge providers like Google and Facebook, which are not covered by the FCC’s proposal.)

Privacy groups, which were celebrating last week, argued that tough new rules are needed. With its limited enforcement authority, the FTC must rely on the threat of lawsuits, while the FCC does not. The groups, including the American Civil Liberties Union, Center for Digital Democracy, Free Press and Public Knowledge, want the FCC to use that regulatory authority.

The FCC essentially deeded itself new authority over broadband CPNI when it reclassified Internet access service as a telecommunications service, but said it would not simply graft the phone CPNI regs onto broadband.

Cable operators have an ally in Republican FCC commissioner Michael O’Rielly. In a speech last week, O’Rielly. said he had “deep concerns” about the “direction the commission may be headed on the use and analysis of data by broadband companies.” He said that in the name of privacy the FCC seemed “intent on doing great damage to the interworking of the Internet.”

FCC Takes Bite Out of ‘Supercookies’

In a related move last week, in only the second enforcement action for the FCC’s new enhanced transparency rules under the Open Internet order, Verizon agreed to pay $1.35 million and get its customers’ permission to insert “supercookies” into their mobile Internet streams, which allow Verizon and third parties to deliver targeted ads.

“As a result of the investigation and settlement, Verizon Wireless is notifying consumers about its targeted advertising programs, will obtain customers’ opt-in consent before sharing UIDH with third parties and will obtain customers’ opt-in or opt-out consent before sharing UIDH internally within the Verizon corporate family,” the FCC’s Enforcement Bureau said in announcing the settlement.

Karen Zacharia, Verizon chief privacy officer, last week took issue with the FCC’s use of “supercookie” to describe the UIHD. In a blog post, Zacharia maintained it was not a cookie, which is placed and stored on computers, but rather “a piece of data included in the header of certain Internet traffic.” In any event, said Zacharia, the fact that the company settled does not change its view about the FCC broadband privacy rulemaking and its support for the ISP proposal.

“Any broadband privacy framework adopted by the FCC should be flexible enough to permit carriers to innovate and compete while providing customers the information they need to make privacy-related decisions,” she said.

Protecting the Stream

Also on the FCC’s agenda is how to protect cable customer information when it makes those programming streams available to third-party set tops, as it plans to do in a proposal adopted last month.

The commission’s proposal requires third parties to certify that they will protect the privacy of cable subs’ CPNI since as edge providers and app developers they are not subject to Section 222.

The FCC promises that it will not allow an MVPD to pass through its information streams to a third party without that certification. ISPs argue that since the FCC does not trust them to self-certify they are not blocking or degrading or prioritizing for pay, there is no reason to assume that edge providers can be trusted to comply with the privacy regs.

To read the FCC’s new privacy proposal, go to broadcastingcable.com/March14.

NAB SLAMS FCC OVER CABLE DECISION

Broadcasters continue to fight an FCC decision to declare cable operators subject to local market competition unless a local cable franchise can prove otherwise.

The FCC used to presume there was not competition, and made multichannel video programming distributors (MVPDs) prove there was. But with satellite TV now reaching virtually every market, the FCC over the past few years has granted virtually all such requests.

In a court filing last week the National Association of Broadcasters challenged the decision, saying the FCC was abdicating its responsibility to make an affirmative determination of competition.

An effective competition determination means deregulation of the basic cable tier. The NAB argues that will lead to even larger cable bills and possibly the dismantling of the basic tier, where cable operators have been required to put broadcast stations.

Cable operators and the FCC argue it is just reversing the presumption, while the NAB says the FCC can just take an absence of challenges to effective competition petitions as the presence of competition.

The court challenges come against the backdrop of the NAB’s hammering on cable for price and service in their ongoing battle over the retransmission consent/must-carry regime.