FTC Investigates ISP Privacy Practices

May 2, 2019 | by Andrew Regitsky

FTC Investigates ISP Privacy Practices

With the FCC unwisely choosing to turn over almost all regulation of the Internet to the Federal Trade Commission (FTC) when it classified broadband Internet access service as an information service in the Restoring Internet Freedom Order, it is now up to a government agency with much less expertise in telecom to ensure consumers are treated fairly. That being the case, we are about to get our first taste of how the FTC will do with its recent decision to launch a probe into the privacy practices of Internet service providers (ISPs).

At the end of March, that Commission sent letters to seven ISPs, including AT&T Inc, AT&T Mobility LLC, Comcast Cable Communications (Xfinity), Google Fiber Inc, T-Mobile US Inc, Verizon Communications Inc, and Cellco Partnership (Verizon Wireless), with a variety of privacy-related questions to be answered by the middle of May. Specifically, the FTC is looking for information describing the policies, procedures and practices ISPs use while handling private customer as the telecommunications continues to change.

The FTC is initiating this study to better understand Internet service providers’ privacy practices in light of the evolution of telecommunications companies into vertically integrated platforms that also provide advertising-supported content. Under current law, the FTC has the ability to enforce against unfair and deceptive practices involving Internet service providers. (FTC March 26, 2019 press release).

The agency is looking for the following kinds of information:

  • The categories of personal information collected about consumers or their devices, including the purpose for which the information is collected or used; the techniques for collecting such information; whether the information collected is shared with third parties; internal policies for access to such data; and how long the information is retained;
  • Whether the information is aggregated, anonymized or deidentified;
  • Copies of the companies’ notices and disclosures to consumers about their data collection practices;
  • Whether the companies offer consumers choices about the collection, retention, use and disclosure of personal information, and whether the companies have denied or degraded service to consumers who decline to opt-in to data collection; and
  • Procedures and processes for allowing consumers to access, correct, or delete their personal information.

The issue of how ISPs use customer information has been controversial since the end of the Obama administration. At that time, the Democratic-majority FCC created what some believed were onerous and one-sided privacy rules for ISPs that did not impact content providers. The Republican-majority Congress agreed with this assessment in early 2017 and prevented the implementation of those rules.

For years, the major ISPs have denied selling or sharing their customer browsing histories to third parties. However, earlier this year, T-Mobile, Sprint, and AT&T were reportedly selling their mobile customers' real-time location information to third-party data brokers. Congress is now investigating those reports. With that backdrop, the FTC is now springing into action. The letters are just the beginning:

Chairman Joe Simons says it’s just one step the agency is taking on privacy and data use. The FTC chief called the orders a “first shot out of the box" during an event on Tuesday, adding that the commission plans to do “much more.” “It’s a full range of things. It’s everything from 6(b) to hearings to workshops to investigations, and potentially enforcement actions,” he said at Free State Foundation’s annual policy conference. (Politico on-line, March 27, 2019)

The Federal Trade Commission Act provides the FTC with its investigative authority. Section 6(b) specifically enables it to “require the filing of annual or special reports or answers in writing to specific questions" for the purpose of obtaining information about "the organization, business, conduct, practices, management, and relation to other corporations, partnerships, and individuals" of the entities to whom the inquiry is addressed.

This will be quite a test for the FTC. Recently it has been trashed by consumer organizations which believe it is unsuited to effectively regulate the Internet. Obviously, it has much less experience with the telecom industry than the FCC. More significantly, it can only catch offenders after specific violations. Unlike the FCC, the FTC cannot establish industry-wide rules in advance. Critics fear that with anti-government Republicans in charge, the FTC is likely to give free rein to ISPs. We will soon find out if this is true.