Results tagged “political favoritism”

November 18, 2016 3:37 PM

Wheeler's FCC: Decisionmaking by Political Favoritism

An independent, "expert agency," like the FCC, is at its most effective when it is focused on keeping the industries it regulates running smoothly, in the interests of consumers, by filling policy "potholes."  On the other hand, nothing incites partisan rancor like addressing "problems" that look a lot more like ideological crusades, rather than good faith efforts to address genuine consumer grievances.  

Under Chairman Tom Wheeler, the FCC became a battlefield for "proxy wars" pitting business interests against each other in the name of ideology--that, itself, was a disguise for transparent political favoritism.  These battles were fought not by the traditional strength of evidence and argument, but instead through PR campaigns, produced social media outrage, and 3rd party Hessians claiming the "public" or "progressive" interest mantle. This approach has devalued the deliberative process and the role of  the majority and minority commissioners in driving consensus at the expert agency.

A Regulatory "Pothole"

A good example of a regulatory "pothole" is the agency's response to rapid adoption of VoIP technology by consumers in the early 2000's.  Though VoIP calls were a cheaper substitute for PSTN calls in most respects, because VoIP calls didn't use the PSTN, consumers could not access E911 service.  

After some well-publicized tragedies, the FCC quickly focused on this specific issue (out of a larger number of issues) in its already-pending 2004 VoIP NPRM.  Acting quickly, and unanimously, the FCC issued an Order in 2005, adopting some interim measures to: 1) better inform consumers of the limits of nomadic VoIP services, and 2) to ensure that "interconnected" VoIP providers quickly became able to offer E911 service to their customers by terminating calls through CLECs.  

But, if the VoIP 911 matter was an example of interested stakeholders (carriers and public safety/law enforcement) forthrightly putting their interests on the table, and the FCC balancing those interests to find the best solution for consumers, the FCC's recent Broadband Privacy Order provides a good illustration of the exact opposite type of proceeding. 

Broadband Privacy ≠ Internet Privacy

The Commission's classification of broadband Internet access service as a "telecommunications service," in its 2015 Open Internet Order, in turn, allowed the FCC to define what information, with respect to this service, it would define as "customer proprietary network information" ("CPNI") under Section 222 of the Act.  Section 222 defines CPNI as, essentially, information that the service provider knows by virtue of providing a telecom service to a customer, and requires the carrier to obtain customer permission before selling the customer's CPNI to a third party.  

The Interent Service Providers ("ISPs") argued that consumer Internet usage information is not information uniquely held by the ISP, in the way that CPNI was uniquely in possession of a telecommunications carrier in 1996 (when Congress wrote the law).  See, e.g., AT&T Comments pp.9-30.  Rather, the primary market for consumers' internet usage information is the online advertising market. , in which the ISPs do not possess sufficient unique, or valuable, consumer information to even possess a measurable share of the market.

Indeed, consumer Internet usage information is "monetized" in the online advertising market--a market in which almost 2/3's of all revenue, and 90% of growth since 1Q 2015, is controlled by Google and Facebook!  Significantly, the online advertising market is also one in which no ISP even possess a measurable share of the market.  Not surprisingly, according to Princeton University researchers, Google and Facebook account for all of the top 10 third party trackers on the Web

 The ISPs explained that, despite the FCC's rhetoric in its NPRM about consumer "privacy,"

[n]o matter what the Commission does in this proceeding, major actors in the Internet ecosystem will continue to track and use all of the same information the proposed rules would keep ISPs from efficiently tracking and using.

See, e.g., AT&T Comments at p. 35 (emphasis added).  Thus, they argued, the FCC's proposed rules would not enhance consumer privacy, but merely foreclose competition in the online advertising market.

Party Participation vs. Proxy Participation

Given the competitive significance of the FCC's proposed rules, you might think the record in this proceeding would pit edge providers and ISPs against each other, with each side trying to show why the ISPs do/don't possess some unique information about their customers that is worthy of rules protecting its disclosure.  If this was your guess, you'd be half right; the ISPs definitely showed up with their best information/arguments.  

On the other side, though, neither Google/Alphabet, nor Facebook appears in any search of this docket.  Yet, the FCC had no trouble finding support in the record for its contention  that it is the ISPs from whom consumers' information needed protection, and not the two dominant firms in the business of collecting and selling that information.  If you look through the Order, you'll see that a majority of the support the FCC cites is supplied by parties with ties to Google, Facebook, or other edge providers.

For example, the Electronic Frontier Foundation (cited 45 times in the Order) is a frequent advocate for, and recipient of funding from, both Google and Facebook.  We've discussed Public Knowledge (56 cites) here before, but it and other groups that the Commission cites frequently, like the Center for Democracy & Technology (61 cites),  and the New America Foundation Open Technology Institute (72 cites) are also supported by Google.  The Commission also cited a paper filed by Upturn, which is a legal/policy advocacy group, whose involvement was sponsored by the Media Democracy Fund (supported by edge providers Microsoft and Tumblr.) 

Even groups with names as innocuous as Consumer Federation of America/California, Consumer Watchdog, and National Consumers League are groups for which Google discloses support.  Academics, as well, may have more than an "academic" interest.

Princeton University Professor, Nick Feamster comments, but doesn't disclose that he has received $1.6  million from Google over the past 5 years.  Other Princeton faculty members filed comments similar to Feamster's.  And, in May, Princeton's Center for Information Technology Policy, of which Feamster is Acting Director, was a co-sponsor, along with Google-funded Center for Democracy and Technology, of a policy conference on the topic of "broadband privacy."  The Google Transparency Project notes that 5 of the 7 panelists at the event had received support from Google.   

You Need Not Be Present to Win

The reasons behind some parties' participation doesn't mean that their advocacy/arguments were wrong, but the FCC woud have benefited more from a direct exchange between both sides with first-hand knowledge of the consumer information they track.  And, why weren't Google and Facebook in the record, making these points, themselves? 

One reason could have been that more information about these firms' dominance in online advertising came out over the summer, including a paper by one of the Princeton academics in this proceeding, noting that Google and Facebook controlled all the top 10 third-party trackers.  Another reason for Google's absence may have been that it went back on its self-imposed ban on using consumers' personally-identifiable information in its web tracking, according to this ProPublica report

Would it have been embarrassing for the leading edge providers to ask the government for protection from competition?  Maybe, but consumers deserved the ability to transparently see which side--between two interested parties--the government was choosing, and why.  

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The FCC's leadership has been willing to undertake ideological crusades for the sole purpose of advantaging politically-favored firms.  The transparent nature of the FCC's actions ensure that they will quickly be undone by a subsequent Commission.  The legacy of such leadership leaves only acrimony among the majority of Commissioners trying to put consumers first.  Hopefully, the next FCC will  learn from history.