FTC's Ohlhausen Praises Plan To Reverse Net Neutrality Rules

Acting Federal Trade Commission head Maureen Ohlhausen praised the news that the centerpiece of the net neutrality rules could soon be reversed, arguing that the move would mark "an important step toward restoring the FTC’s ability to protect broadband subscribers from unfair and deceptive practices, including violations of their privacy."

Ohlhausen's statement came in response to the news that Ajit Pai, head of the Federal Communications Commission, wants to repeal the agency's 2015 decision to classify broadband as a utility service.

The FCC took that step two years ago in order to impose some common-carrier rules on providers -- including prohibitions on blocking content and on paid fast lanes. Earlier in the decade, the FCC passed a set of open Internet rules that also blocked carriers from blocking or degrading content, but a federal appeals court threw out those regulations; the court reasoned that the FCC couldn't ban ISPs from blocking content without first reclassifying broadband as a utility.

After the FCC declared broadband access to be a utility service, the agency passed regulations requiring carriers to protect consumers' privacy. Among other terms, the regulations prohibited broadband providers from drawing on consumers' Web-surfing data without their opt-in consent.

Congress recently repealed those rules under the Congressional Review Act -- a 1996 measure that allows federal lawmakers to vacate recent agency decisions. When Congress uses that vehicle to scrap rules, the agency that issued them is prohibited from replacing the rules with substantially similar ones.

Ohlhausen now obviously hopes that if the FCC declares that broadband isn't a utility, the FTC will be able to police carriers' practices. "I look forward to working with Chairman Pai and other stakeholders to return to broadband subscribers the consumer protections they deserve," Ohlhausen stated.

But there is a problem with Ohlhausen's stance: The FTC may not be able to police broadband providers' privacy practices even if Pai's proposal is accepted.

That's because the 9th Circuit Court of Appeals recently limited the FTC's power to police some types of companies, including telephone providers. That ruling came in a dispute between the FTC and AT&T over its prior throttling policies. The FTC alleged that AT&T misled consumers by selling them unlimited data, only to throttle them after they exceeded a monthly cap of 3GB-5GB.

AT&T argued that the case should be dismissed because a federal statute says the FTC lacks authority over common carriers. The FTC countered that mobile broadband wasn't a common carrier service between 2011 and 2014 -- which is when AT&T allegedly duped its customers.

The 9th Circuit sided with AT&T. The judges suggested in their ruling that AT&T's longstanding role in providing telephone service exempted the company from FTC jurisdiction for all purposes -- even though mobile broadband wasn't considered a common carrier service when AT&T allegedly misled people.

The FTC has asked the 9th Circuit to reconsider that ruling; the FCC, consumer groups and lawmakers are backing the request. For now, however, that ruling gives broadband providers powerful ammunition to argue that they're immune from FTC authority.

Ohlhausen's views apparently aren't shared by fellow Commissioner Terrell McSweeny. She said last week that repealing the net neutrality rules would be "an even bigger disaster for consumers, innovators and entrepreneurs in the long run than the repeal of the broadband privacy rules."

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