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FCC Backs FTC's Challenge to Ninth Circuit Ruling

FCC lawyers agree a recent court decision could threaten the privacy partnership between the FCC and Federal Trade Commission necessitated by the reclassification of ISPs as Title II common carriers.

The FCC this week filed an amicus brief with the U.S. Court of Appeals for the Ninth Circuit supporting the FTC’s challenge of a ruling by a three-judge panel of that court that calls into question the FTC's ability to protect the privacy of web user's data or determine how it can be shared by edge providers—Google, Facebook.

The FCC has just voted to approve tough new regs on how ISPs can use their subs' broadband data for things like targeted marketing, but the FTC's ability to enforce even its lighter-touch approach on some edge providers has been called into question.

The FCC said the FTC had made a "compelling case" for an en banc (full court) rehearing. Courts do not frequently grant such requests but could gin this case given the regulatory gap the decision appears to create. The filing, which was made before the FCC’s Oct. 27 vote on its new regs, pointed out that vote was coming and that rules did not apply to edge privacy, including websites owned by broadband providers.

"By restricting the FTC’s authority over non-common-carrier offerings of entities that also provide common carrier services, the panel’s decision creates uncertainty regarding the agencies’ collaborative efforts to protect the public interest, and potentially undermines those efforts," the FCC said. 

That is because the FCC and FTC have to take a sort of Jack Spratt approach given the bifurcated authority over ISPs and edge providers. For instance, the FCC regulates Google Fiber sub data privacy, while the FTC regulates Google search engine surfer data privacy, with different regimes and levels of protection for each. 

The FTC has authority over edge privacy, while the FCC oversees ISP privacy. But the Ninth Circuit ruled that the regulatory exemption that prevents the FTC from regulating common carriers (including ISP privacy now that the FCC has reclassified them as common carriers) is "status"-based and is not confined only to common carrier "activity" but to noncommon carrier activity by that entity as well.

That suggests that an edge provider, say, could skirt any privacy regs by merging with a common carrier—Yahoo! and Verizon, for example—because the FCC's reclassification of ISPs as common carriers triggered that exemption, while the FCC says it does not have authority over edge providers (whether it does or not is a matter of some dispute).

The FTC had claimed that the exemption was activity-based, so that it only applied to common carrier activities undertaken by common carriers. That left the FTC free, or so it thought, to regulate the mobile broadband of AT&T, which at the time of the action was classified as a non-common carrier service. A district court, in refusing AT&T's request that the FTC case against it be dismissed, had concluded that the exemption applied “only where the entity has the status of common carrier and is actually engaging in common carrier" activity. The Ninth Circuit panel disagreed.

The FTC had warned that a "status"-based finding could tie its hands and sought full-court review of the panel decision.

(Photo via Tori Rector's FlickrImage taken on July 21, 2016 and used per Creative Commons 2.0 license. The photo was cropped to fit 3x4 aspect ratio.)