Broadband Privacy Rules Coming Soon, FCC Chairman Says

The Federal Communications Commission intends to move forward with new privacy rules for broadband providers this fall, Chairman Tom Wheeler said today.

“Demand for broadband .. is affected by consumers’ perceptions about the potential non-monetary costs of using it,” Wheeler stated this morning in a speech delivered at the Brookings Institution. “We committed in the Open Internet order to address issues of privacy implicated by consumers’ use of the Internet. We will begin that process with a Notice of Proposed Rulemaking in the autumn.”

With that statement, Wheeler answered a question posed by the Interactive Advertising Bureau four weeks ago, when representatives met with regulators in order to ask whether they will commence a rulemaking related to privacy.

The FCC's new interest in broadband privacy stems from its decision to reclassify Internet service providers as common carriers. One consequence of that move is that broadband providers are now subject to some of the same confidentiality requirements rules as telephone companies.

When the FCC issued its open Internet order, the agency said it will “forbear” from applying the precise rules that it imposes on telephone companies, but will consider issuing new broadband-specific rules. “The existing ... rules do not address many of the types of sensitive information to which a provider of broadband Internet access service is likely to have access, such as (to cite just one example) customers’ web browsing history,” the agency stated in its net neutrality order.

Since then, regulators have advised broadband providers to follow the “core tenets of basic privacy protections,” but haven't suggested any specific privacy regulations.

At least two privacy-related developments seem likely to be addressed in the upcoming rulemaking. One center's on Verizon's “supercookie” tracking technology, which relies on injecting a unique code into customers' mobile traffic. The technique allows Verizon to track users' mobile Web browsing in order to serve them targeted ads; it also lets Verizon and other companies recreate information about people's Web activity, even if they delete their cookies.

Verizon's supercookies drew attention from lawmakers in January, after it emerged that the ad company Turn was using the headers to track mobile users.

At the time, Verizon inserted the headers in all traffic, even if people opted out of receiving targeted ads. After news about Turn emerged, Verizon changed course and said it would allow subscribers to opt out of the headers.

The FCC also seems likely to consider AT&T's decision to charge higher fees to some U-Verse subscribers who opt out of receiving targeted ads. The carrier currently charges U-verse subscribers in Austin and Kansas City an extra $29 a month for declining to participate in the “Internet Preferences” ad program -- which involves sending targeted ads to people based on their Web browsing information, search queries and pages visited.

Consumer advocates have criticized AT&T's model, arguing that the $29-per-month price tag turns privacy into a luxury service.

Privacy isn't the only area where the FCC intends to move forward. Wheeler also said today that he wants the FCC to take action on his plan to give “over-the-top” online video distributors some of the same rights as cable and satellite providers.

Specifically, Wheeler wants to broaden the definition of multichannel video program distributors in a “technology-neutral” way, so that it includes some online video distributors.

If that happens, television broadcasters could be required to negotiate with Internet-only companies that want to Webcast programs -- like the now-defunct Aereo. (Online distributors like FilmOn or the former Aereo also would have to convince the Copyright Office they are entitled to a statutory copyright license. The Copyright Office said last year that it was inclined to reject applications from Aereo and FilmOn, but indicated that decision could change in the future.)

For now, Wheeler suggested that the FCC should do what it can to pave the way for over-the-top companies. “Another way to stimulate broadband is to increase opportunities for additional competition in upstream markets,” the FCC head stated today. “There is a line of new OTT providers queuing up to expand video choice -- and increase consumer demand -- for broadband.”

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