FTC's Ohlhausen Criticizes Broadband Privacy Proposal

New broadband privacy rules proposed by Federal Communications Commission Chairman Tom Wheeler will "unavoidably reduce consumer choice." At least according to Federal Trade Commissioner Maureen Ohlhausen, who criticized the privacy proposal in a speech delivered this week at the Free State Foundation's annual telecom policy conference.

Wheeler recently said he intends to propose rules requiring broadband providers to obtain consumers' express consent before collecting data about their Web-surfing activity in order to serve them behaviorally targeted ads.

That proposal has generally drawn praise from privacy advocates -- although some would like to see even more stringent rules.

The New York Times editorial board is among the supporters. "These rules are necessary because consumers need to have control over their personal information," the Times wrote in a recent editorial.

Broadband providers, on the other hand, oppose the prospect of new privacy restrictions.

Ohlhausen made clear this week that she thinks Wheeler's proposal goes too far. "Opt in mandates unavoidably reduce consumer choice," she said. "If privacy rules impose the preferences of the few on the many, consumers will not be better off."

Ohlhausen said that she saw two potential problems with the Wheeler's proposal. The first, according to the commissioner, is that consumers don't necessarily want their Internet service providers to refrain from data collection without opt-in consent. "If the FCC mandates opt in for a specific data collection, but a majority of consumers already prefer to share that information, the mandate unnecessarily raises costs to companies and consumers," she said.

The other major problem, according to Ohlhausen, is that opt-in requirements will prevent companies from using data in unanticipated ways. "An effective and transparent opt-in regime requires that companies know at the time of collection how they will use the collected information. Yet data, including non-sensitive data, often yields significant consumer benefits from uses that could not be known at the time of collection," the commissioner argued.

She added that there's a difference between some kinds of sensitive data -- like credit card numbers, for instance -- and other information. "If the FCC wished to be consistent with the FTC’s approach of using prohibitions only for widely held consumer preferences, it would take a different approach and simply require opt in for specific, sensitive uses."

The FCC will vote on the matter on March 31. If the commission moves forward, it will seek comments from the public on the proposed regulations.

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