Big ISPs Fighting Privacy

Old padlock with the key in the keyhole lying on a wooden board

One of the quietest regulatory battles is happening at statehouses rather than with regulators. The large ISPs and big Silicon Valley companies have joined forces to kill any legislation that would create Internet privacy.

The privacy battle got started in 2016 when the FCC passed new privacy rules that required ISPs to get permission from customers before selling their personal data or browsing history. Those new rules would have gone into effect in April of 2017. But Congress intervened to kill the new privacy rules before they went into effect. In an effort led by Senator Jeff Flake, Congress added language to the Congressional Review Act, the bill used to approve the federal government budget, that rolled back the FCC’s new rules and that also prohibited the agency from introducing new rules that were ‘substantially similar’.

Since that time there have been numerous attempts in state legislatures to provide privacy rights for citizens. According to Michael Gaynor of Motherboard there have been over 70 bills in state legislatures in the last year that have attempted to introduce consumer privacy – and all have failed.

That’s an amazing statistic considering the public sentiment for putting curbs on ISPs being able to use customer data. A Pew Research poll from earlier this year showed that over two-thirds of people support stronger privacy rules.

The legislative failures have all come due to intense lobbying from ISPs. The big telcos and cable companies have always had a strong presence in statehouses and have contributed to campaign funds for key legislators for years. The lobbying effort has paid off many times in the past, but not always. The lobbying effort for the privacy issue has been particular effective since the big Silicon Valley companies like Google and Facebook have joined forces with the big ISPs.

Those two sets of companies are rarely on the same side on issues, but they all have a vested interest in monetizing customer data. The big web companies like Facebook and Google make most of their money by leveraging customer data. The big ISPs are newer to this business line, but they all have acquired data firms over the last two years to help them compete with Google for advertising dollars.

It’s not talked about a lot, but Silicon Valley firms now spend more money on lobbying in DC than the big ISPs. These companies are newer to lobbying at the state level, but the privacy issue has drawn them into local lobbying in a big way.

The privacy laws passed by the last FCC are similar to those in effect in Europe. Web users there get the choice to opt out of being tracked by online companies and ISPs. Interestingly, a lot of people in Europe elect to make their data available to the web companies. Many people like the personalized advertising and other benefits that comes along with the surveillance. It turns out that many people, particularly Millennials don’t mind being tracked, and are not opting out. Apparently, though, that’s not good enough for the big web companies who want to track everybody online.

There are still ways for consumers who don’t want to be tracked to reduce their web presence. People can use VPNs to bypass their ISP, although there is still a risk of the VPN provider harvesting their data. There are several companies working on creating an encrypted DNS service that hides web searches from ISPs. Numerous people (like me) have dropped services like Facebook that are openly tracking everything done inside the platform. Search engines like Duck Duck Go, which don’t record web searches are growing in popularity.

Of course, one of the best ways to cut down on surveillance is to change service to a small ISP. Small telcos, WISPs, fiber overbuilders and municipal ISPs don’t track and monetize customer data. Unfortunately, most people don’t have an option other than a big ISP. I always advice my clients, who are all small ISPs to emphasize that they don’t spy on their customers – it’s a strong selling point to people who care about privacy.

Challenging the Net Neutrality Order

It looks like there are going to be a number of challenges to the FCC’s recent repeal of Title II regulation and net neutrality. Appealing FCC decisions is normal for controversial rulings and the big telcos and cable companies have routinely challenged almost every FCC decision they haven’t liked.

The FCC voted to repeal Title II regulation on December 14th, but just released the order on Friday. As expected, there were some wording changes made that the FCC hopes will help during the expected legal challenges. The time clock for any challenges will start when the order is published in the Federal Register. The FCC order goes into effect 60 days later and any court challenges must be filed within that two-month window.

When FCC rules are challenged, it’s not unusual for a court to put a stay on some parts, or even make an entire new ruling until the legal issues are sorted out. This happened a few years back when Verizon challenged the FCC’s first net neutrality order and the courts stayed all of the important parts of that ruling before eventually ruling that the FCC didn’t have the authority to make the rules as they did.

It appears that challenges are going to come from a number of different directions. First, there are states that have said they will challenge on procedural issues. This is a tactic often taken by the big ISPs, and generally if the courts agree that the FCC didn’t follow the right procedures in this docket they will then rule that the agency has to start the whole process over again. That alone would not change the outcome of the proceeding, but it could add another year until the FCC’s order goes into effect. I wonder if this kind of delay is meaningful because it’s likely that this FCC won’t enforce any net neutrality ‘violations’ during a reboot of the rules process.

The Attorney General of New York has an interesting appeal tactic. He is claiming that the FCC ignored the fact that there were millions of fake comments made in the docket – some for and others against the proposed rules. New York is suing the FCC over the issue and expects some other states to join in the lawsuit. This would be a unique procedural challenge and would be another way to have to reset and start the whole process over again.

Legislators in California, New York and Washington are planning to tackle the issue in a different way. Legislators are proposing to create a set of state net neutrality laws that basically mimic what was just repealed by the FCC. These states would not be directly challenging the FCC order and it would require some third party like a big ISP to challenge the state laws through the court system. Such a process might take a long time since it might have to go through several layers of courts, and might even end up at the US Supreme Court. State’s rights have been a common way to challenge FCC rulings ad there have been numerous fights between states and the FCC any time that Congress has created ambiguity in telecom laws.

The hope of these state legislators is that the state rules will be allowed to stand. They know that if ISPs and other tech companies have to follow net neutrality laws in large states like California that they are more likely to follow them in the whole country. A similar State / Federal battle is also underway on a different issue and twenty states are considering enactment of state privacy laws to replace ones preempted by Congress.

Another challenge to the FCC’s decision will come from democrats in Congress who are trying to use the Congressional Review Act (CRA) rules to challenge the FCC’s ruling. This is a set of rules that allow Congress to reverse rulings from administrative agencies like the FCC with a simple majority and has been used effectively recently by republicans in a number of ways. With a 51-49 Republican majority it would only take a few republican defections to maintain at least some aspects of net neutrality. The make-up of the Congress might also change with the elections later this year – meaning that Congress might change the rules in the middle of all of the various appeals.

One thing is for certain – this FCC ruling is not going to be easily implemented and I’m guessing that during the next sixty days we will see a number of creative challenges used to appeal the FCC’s ruling. It could easily be a few years before these issues are resolved through the courts.