Consumer Protection or Protectionism? The FCC’s Privacy Rules Might Provide Less Choice, and More Confusion, Than Consumers Expect
By Steven K. Berry, President & CEO, CCA
Consumer protection is a tricky thing. Of course all consumers deserve adequate information and transparent practices, but consumer choice doesn’t have to come at the expense of receiving better broadband service, lower prices, or new and innovative technologies. So when policymakers embark on a consumer protection mission, it seems only reasonable for the regulators to listen to what consumers want and need, and they should make sure protections are consistent across all platforms. Federal Communications Commission (FCC) Chairman Tom Wheeler’s proposed privacy protections are a good example of how important it is to consider consumer expectations. If you ask consumers whether they think all Internet companies, including ISPs like mobile carriers, should operate under the same set of privacy rules, over 90% would agree. Further, 83% of all consumers agree that online privacy should be based on the sensitivity of their online data, rather than the type of company collecting that data. In other words, consumers want one set of transparent and easy-to-understand rules. These statistics come from the Progressive Policy Institute’s recently-released survey of consumers’ privacy protection desires. Hence, this survey should resonate with the FCC and should take heed that its current proposal will likely will cause consumer confusion and result in less consumer protection.
The FCC’s proposed privacy rules—most recently outlined in a Fact Sheet released by the Commission—would require a mobile carrier to obtain customers’ express permission, or “opt-in,” to use, share, or permit access to categories of sensitive information like geolocation, children’s information, health information, financial information, social security numbers, the content of communications, but also all web browsing and app usage history. The FCC regime also may require a carrier to allow a customer to “opt out” of first-party marketing based on non-sensitive information for any service not in the same category of “core” services ordered by the customer. This means more administrative red tape for carriers with innovative service offerings—like “Internet of Things” products, or mobile device offerings—and existing partnerships that largely exist to provide consumers expanded services. This will lead to more notifications that consumers will likely ignore or miss, and more lost opportunities to provide added value to existing services. Do you really want the government to regulate whether you receive information, or a special discount, on the new iPhone or virtual reality equipment? This consumer doesn’t.
Competitive mobile carriers—those outside the AT&T and Verizon “duopoly,” which commands more than 70% of all service revenue in the wireless market—would suffer the most if the FCC moves forward with its proposed rules. Consumers want more content, smarter and cheaper devices, and opportunity for savings. As such, carriers compete with edge providers like Amazon or Facebook, with broad access to consumer data under the FTC’s regime. For example, imagine a consumer wants to buy a new tablet and their competitive mobile carrier offers tablets at 20% off sticker price. Google might know that particular consumer wants to buy a tablet, based on their web browsing history, and would accordingly place targeted ads in the customer’s search results. But under the FCC’s proposed rules, a carrier would likely have to get the consumer’s express permission to offer the same 20% tablet discount. This does not foster competition; in fact, it provides consumers with fewer choices.
Competitive carriers should be able to explore new revenue streams by offering innovative and consumer-friendly products, services, and features to consumers, as long as a carrier does not use content of communications, web browsing history, or app use history data if it includes truly sensitive data such as precise geolocation, and information related to health, children, or finances. This would align the FCC’s privacy framework with the principles applied by the FTC to the other actors in today’s data-rich Internet ecosystem. The FCC also should follow the FTC’s lead and allow companies even more flexibility to market products and services to their customers, which is critical to an ISPs ability to compete. After all, “competition, competition, competition” is Chairman Wheeler’s mantra. A more flexible privacy protection regime will benefit carriers and consumers alike, giving both what they want and need. I fear the FCC has forgotten that “an informed consumer is the best customer” and the FCC is making it difficult for consumers to be “informed.”