It's time to put an old cop back on the internet beat

It's time to put an old cop back on the internet beat
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While news reports overflow with examples of the Trump administration pulling back on oversight of business, they’re missing the story in one key area: the administration’s aggressive move to restore Federal Trade Commission (FTC) power to police the internet.

For decades, the FTC has been the lead federal agency charged with protecting consumers in the brick and mortar economy and, more recently, online.

But back in 2015, the Federal Communications Commission (FCC) seized exclusive power to regulate internet providers. The move ousted the FTC completely and erased decades' worth of federal internet enforcement policy on issues such as privacy, consumer protection, truth in advertising and more with the stroke of a pen, and it left consumers exposed.

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And while it may sound like a messy inside baseball game of regulatory alphabet soup, this jurisdictional land grab actually has huge consequences for everyone on the web.

 

While the FCC is charged with protecting the public interest, it ultimately lacks the staff, resources, and statutory authority needed for a true on-the-ground, national consumer protection effort. The FTC by contrast has the institutional expertise and Congressional mandate from Congress to rein in corporate abuses and protect consumers. 

Only the FTC can tackle the rising power of the internet giants and hold the big broadband companies accountable for the promises they make consumers. Want to be sure you are getting the “lightning fast” internet speeds that were advertised, worried about fake news polluting your Facebook feed (and our politics), scared of data miners profiling and microtargeting of your children? Those are FTC issues and only restoration of the agency’s traditional role protecting consumers can address them. 

FCC Chairman Ajit Pai deserves credit for recognizing this and moving to restore the FTC’s internet enforcement authority, putting an experienced cop back on the beat to protect consumers online. (Critics worry litigation in California may continue to limit the FTC’s authority even if the FCC acts, but most experts believe the courts will also support the FTC’s traditional role.) From privacy to transparency to fair competition, it will ensure all internet companies receive the oversight and scrutiny applied to every other major business. 

The move is part of a broader FCC effort to rationalize internet regulation to protect consumers and strengthen the internet ecosystem, particularly by boosting investment to deploy faster, more capable networks and close the “digital divide” plaguing many rural, tribal, and low-income communities. 

The heart of this effort is a proceeding currently underway at the FCC to reconsider the Obama administration’s misguided 2015 decision to impose ill-fitting “Title II” telecommunications regulations on broadband. It was that switch from the Clinton era “light touch” approach to the archaic command and control of Title II that ousted the FTC in the first place.

Title II is the most extreme form of regulation in the federal Communications Act, a massive superstructure of “public utility” style rules originally designed for the rising telephone monopoly in the early 1930s. It was created by frightened regulators still reeling from the Great Depression and scarred by the brutal anti-consumer monopoly trusts that dominated the early days of railroads, oil, and finance.

That central planning model is a terrible fit for the dynamic modern internet where competition and breakneck technological innovation are producing incredible benefits and capabilities for consumers. One study found that encasing the internet in the regulatory quicksand of Title II would drive down private sector investment by roughly $35 billion a year, a massive shortfall that will slow down efforts to connect unserved communities and provide faster service to all. Another found that just the first year of Title II choked off over five percent of expected network investment.

Indeed, the impact of Title II on broadband is so severe that, earlier this year, 19 local government owned nonprofit internet providers complained to Pai that “we often delay or hold off from rolling out a new feature or service” because of the risks and costs associated with the rules.

The Obama FCC only turned reluctantly to Title II because it was searching for a strong legal foundation to issue separate, far narrower rules to protect “net neutrality” — simple regulations stopping broadband providers from blocking websites, manipulating traffic speeds, or harmfully discriminating in the operation of the internet. The courts had previously questioned the agency’s legal power to do this so overcautious regulators brought in the heavy artillery of Title II.

This worked, in a sense, by allowing the agency’s net neutrality rules to hold up in court. But we are seeing now that this regulatory overkill has inflicted unacceptable collateral damage — driving away needed investment and undermining consumer protection for starters.

Chairman Pai is right to reconsider this flawed path.

There are other ways to protect net neutrality. It would ideally include a bipartisan law to make the rules permanent and put them beyond changes in politics or administrations for good.

And in the meantime, repealing Title II will give consumers a strong cop back on the internet beat and propel new investment in farther reaching and faster networks for all.

David Balto served as a policy director for the Federal Trade Commission and is presently an antitrust lawyer in Washington, D.C.