Ad Industry Bashes FCC's Privacy Proposal

The Federal Communications Commission's proposed broadband privacy rules are unnecessary and would exceed statutory authority," a coalition of major ad industry groups said Wednesday in a letter to lawmakers.

The letter, signed by groups including the Direct Marketing Association, Interactive Advertising Bureau, Association of National Advertisers and American Association of Advertising Agencies, comes one day before all five members of the FCC are slated to testify at a Senate Commerce Committee oversight hearing.

The proposed rules -- which would limit broadband providers' ability to use online behavioral advertising techniques -- "would create unnecessary and inconsistent privacy regulations that would undercut the vibrant online ecosystem," the groups write.

They add: "Congress can and should exercise its oversight authority to protect consumers and the economy from this outcome."



The potential rules, unveiled earlier this year by FCC Chairman Tom Wheeler, would require carriers to obtain consumers' consent before drawing on their Web-surfing data for behavioral targeting.

By contrast, ad networks, online publishers and other online advertising companies typically operate on an opt-out basis. That is, the companies notify consumers about online tracking and allow them to decline to receive behaviorally targeted ads -- unless the ads are based on "sensitive" data. (It's worth noting that the definition of "sensitive" appears to be unsettled. The self-regulatory groups Network Advertising Initiative and Digital Advertising Alliance define "sensitive" health information differently; Facebook and Google also have their own definitions of the concept, according to privacy expert and former Federal Trade Commissioner adviser Paul Ohm.)

The DMA and other ad groups say that broadband providers should follow the same standards as ad networks, Web publishers and others involved with online advertising.

"Enforceable, voluntary self-regulatory codes remain best suited to promote consumer privacy protections while allowing these legitimate data practices to flourish," the organizations write in a letter to Sens. John Thune (R-South Dakota) and Bill Nelson (D-Florida).

Wheeler (and privacy advocates) counter that broadband carriers aren't comparable to companies like Google, Facebook and Netflix. "We can choose not to visit a Web site or not to sign up for a social network, or we can choose to drop one and switch to another in milliseconds. But broadband service is different," Wheeler stated earlier this year. "Once we subscribe to an ISP -- for our home or for our smartphone -- most of us have little flexibility to change our mind or avoid that network rapidly."

The DMA and other organizations also tell lawmakers that the proposed rules are unnecessary, given the FTC's role in policing privacy. The groups say that existing self-regulatory standards, backed by FTC enforcement, "are the appropriate tool to govern the dynamic and interrelated online content and advertising ecosystem."

In the past, the FTC has brought enforcement actions against ad networks, analytics companies and other businesses that misrepresent their practices to consumers.

But the FTC doesn't have the same power to sue Internet service providers. Just two weeks ago a federal appellate court ruled that the FTC couldn't proceed with a lawsuit against AT&T for allegedly misrepresenting its "unlimited" data plan. The judges in that case ruled that the FTC lacks authority to prosecute AT&T, given that the company is a common carrier.

Consumer advocates argue that ruling gives the FCC even more reason to move forward with its privacy proposal. "The 9th Circuit stated that ... the FTC cannot enforce against companies with the status of common carrier, like AT&T Mobility," more than three dozen

advocacy groups, including the ACLU, Electronic Frontier Foundation and Public Knowledge, recently said in a letter to the FCC. "Thus, the FTC does not provide a backstop for baseline privacy protections, reinforcing the need for strong FCC-imposed privacy rules now."

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