Washington

FTC Chair OK with Paying For Higher-Speed Broadband

Leibowitz says charging more is acceptable as long as consumers are aware of what they are paying for 5/08/2009 04:55:18 PM Eastern

Federal Trade Commission Chairman Jon Leibowitz said Friday he has no problem with charging more for higher speeds or heavy usage, so long as the bill does not come as a surprise. He also confirms that Google is being investigated for violating the prohibition on interlocking board members, but says that he does not think its dominance of search automatically equates to anticompetitive practice and doesn't think it is abusing its power.

Saying he was speaking for himself, Leibowtiz said in an interview for C-SPAN's Communicators series Friday: "I think it is reasonable to charge more for higher speeds. And if someone is using a lot of bandwidth, like for instance college students on campuses for downloading pirated movies all the time, it's not unreasonable to charge more for them."

But he emphasized that the key was information. "You have to do it in the context of giving them notice so that they can consent to it," he told an interviewer for C-SPAN's Communicators series. "You can't surprise someone with a bill that is 10 times as much as what they expected. That seems to be to me deceptive and unfair."

Leibowitz said that, in terms of consumer protection, he thought the FCC had a big role to play in issues of broadband network management and neutrality. He said the FTC may weigh in on the FCC's notice of inquiry on its grand broadband rollout plan. He said broadband was a deregulated industry, which was a good thing, but that you needed law enforcement to make sure that people were doing the right thing.

He also said he was hoping that both sides of the network neutrality debate were ratcheting down the rhetoric. He pointed to a couple of years ago when both sides painted pictures of "dystopian nightmares" if the other sides position prevailed. It would be useful, he said, to tone down that rhetoric and perhaps come to an agreement. He said he thought both sides were already moving in the right direction.

Privacy protection, particularly Internet privacy, is a "first and foremost" consumer protection function of the commission now and going forward, he said, adding that he plans to remain "very, very active" in that area, including behavioral advertising.
Leibowtiz said that from the agency's perspective, "We believes in self-regulation so long as it is vigorous", but as the FTC said in its behavioral advertising guidelines, "it is very, very imporatnt for companies to give them notice and allow for consent." He said if privacy policies can't be understood by consumers, "that's a problem for us, and it may violate the FTC Act."
Leibowitz said that behavioral advertising is a "big issue." But he also said: "We believe that if companies give consumers notice so they can consent, that goes a long way to insuring the marketpace is working." He cited the "obvious" benefits of behavioral advertising: "consumers get ads that relate to them more."

But, again, consumer awareness was the key. If there is not adequate notice, he said, "We will go after them under the FTC act which prohibits unfair or deceptive acts or practices." If we don't see better self regulation in the marketplace, he cautioned, "I think that really is going to drive legislation going forward."

He said that from his perspective, an opt-in regime is the "preferable approach" for informing consumers, both for about tracking and re-selling online information.

C-SPAN asked him what he meant when he said in a 2007 speech that broadband providers do not have a history of being particularly interested or good at developing new applications or content. He said that was because when there was a dominant monopolist, as there was with AT&T for many decades, they aren't as interested in innovating. "It is almost invariably the competitor that innovates."

Asked for his input on network neutrality, Leibowitz came back to the issue of informed consent. "In a perfect marketplace where you had more competitors, you wouldn't need the government necessarily to be terribly involved," he said. "We havent seen discrimination yet based on content or applications that are the providers' content or applications. But if we do see those, it could raise antitrust problems.... We believe consumers need to have notice and consent about what they are getting. so it is very, very important that these providers tell consumers now about the speed that they are getting and whether they are making any types of management decisions in terms of the network."

The FCC has also signaled that the key to network management is giving consumers fair warning about what companies are doing.

Leibowitz said he did not think a big company, like AT&T, Google or Microsoft, should become an automatic target of
regulation just because it is big. "I don't think we look at them as a target simply because they are dominant, but only if they are engaging in anti-competitive practices."

Leibowitz confirmed that Google was being investigated by the FTC for violating the prohibition on competitors sitting on each others boards.

When asked whether Google's dominant position in search was a problem, he said not on its face. Conceding that dominant position, he said that "just having that position doesn't violate the law." Doing something with that position to exclude competition is the problem, he said. But, "if you get to a monopoly position by virtue of your own acumen," he said, "that is really the American way....I certainly don't see Google as abusing its power right now," he said when asked if that were the case, adding: "It has also brought many benefits to consumers."

On an unrelated note, for everyone receiving those autmoatic auto loan calls ("this is your second notice....), Leibowitz says the commission has just voted out a do-not-call violation suit against what he says is a major offender. Look for the suit to be announced next week.

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