Broadband Reclassification Based on Best Thinking Circa 1887, FTC Official Says

Regulating broadband providers under Title II of the Communications Act is more anachronistic than most argue, said Tad Lipsky, acting director of the FTC Competition Bureau, at the Free State Foundation conference Wednesday. Many in industry say reclassifying saddled broadband providers with a regulatory approach from 1934 when the Communications Act was passed, Lipsky said. In reality, the regulation is modeled on the Interstate Commerce Act, signed by President Grover Cleveland in 1887, he said. The act “has been the model for all of the economic regulatory agencies at the federal level in our history,” he said. “I’m a cheerleader for the light regulation approach,” Lipsky said. “I endorse the philosophy that the temptation to look at the problems of a dynamic and quickly developing industry, and to immediately apply the structure of economic regulation” to guard against future problems “has been a fail.” The Interstate Commerce Commission was eliminated in 1996 and the Civil Aeronautics Board was terminated earlier, he said. “It is in many respects a dubious and highly questionable … system of regulation.” Tom Pahl, acting director of the FTC Consumer Protection Bureau, remembers an era when people had party-line phones, his parents had to visit travel agencies to plan family trips, and there were no YouTube videos on performing simple household repairs. “My teenage son cannot even imagine living under those circumstances.” Pahl said. The internet transformed daily life, he said. “In large part, a free-market, limited-regulatory approach has fostered this transformation while protecting consumers from harm.” The FTC is protecting data security, bringing hundreds of privacy and data security cases, Pahl said. The cases “involved offline and online information and companies large and small,” he said. “They covered all parts of the internet ecosystem, including social networks, search engines, ad networks, online retailers, mobile apps and mobile handsets.” If the FCC returns broadband to a Title I regime, the FTC is “ready, willing and able to protect the data security and privacy of broadband subscribers,” Pahl said. “We have a wealth of consumer protection and competition experience and expertise, which we will bring to bear on online data security and privacy laws.” The standards would then apply to all internet companies, not just ISPs, he said. “Our approach would ensure that the standards the government applies are comprehensive, consistent and pro-competitive.” Companies would be held responsible for the promises they make to consumers and accountable for the misuse of information, he said. “We hold companies responsible for not having reasonable data security practices.”