Here’s how the telecom industry plans to defang their regulators

September 12, 2013

FCC Acting Chairwoman Mignon Clyburn. (Photo by Rebecca D'Angelo/For the Washington Post)

As phone companies retool their businesses for the Internet, they are calling on Washington to liberate them from their longtime overseer, the Federal Communications Commission.

Led by high-profile former regulators and lawmakers, telecom giants including Verizon, AT&T and Comcast have launched multiple efforts to shift regulation of their broadband businesses to other agencies that don't have nearly as much power as the FCC.

On Thursday, Jon Leibowitz, the former chairman of the Federal Trade Commission, will lobby House Republican and Democratic staff on behalf of those firms, urging lawmakers to take away some privacy powers from the FCC.

Earlier this week, Verizon Communications asked a federal appeals court to overturn FCC rules that require broadband providers to give equal treatment to all Internet services.

AT&T's head of lobbying, Jim Cicconi, on Wednesday also raised concerns about the FCC's policing of broadband providers. In a speech, Cicconi questioned the FCC's antitrust powers, saying the FTC and Justice Department have more expertise in the area of competition law.

Modernizing the FCC?

In total, the week's flurry of attacks on the FCC brings fresh attention to an agency struggling to keep up with consumers who have cut phone lines for wireless and lightning-fast Internet services.

Telecom firms and some analysts say the agency is trying to force regulations from the old telephone monopoly era onto broadband firms. They argue that those rules are not only out of date, but also aren't applied to Internet competitors such as Skype, Google, Facebook and Netflix.

"My first observation on the mission of the FCC would be to leave competition policy to the antitrust laws and antitrust enforcers," Cicconi said in a speech Wednesday at a luncheon hosted by The Media Institute, a think tank. AT&T's bid for T-Mobile was rejected by the DOJ and FCC in 2011.

"The mission of the FCC has to change. It has to be modernized," he said.

Debates over the FCC's focus on the Internet have escalated as President Obama's new pick for chairman, Tom Wheeler, prepares to take over the agency within weeks. Wheeler hasn't offered specific plans for broadband regulation, an issue he may have to address if a federal appeals court agrees with arguments by Verizon and scraps the FCC's net neutrality rules.

The FCC and FTC declined to comment on overall lobbying efforts by telecom firms. But with Leibowitz's 21st Century Privacy Coalition gearing up for a new lobbying front on telecom privacy, the FCC stressed it has permission from Congress to enforce its own telecom privacy rules.

"The FCC has decades of experience protecting the personal information of consumers who subscribe to cable, phone and satellite services. Its rules are crafted to protect the specific type of information held by communications providers, and have been tested in court," said FCC spokesman Mark Wigfield. "Elimination of the FCC's existing authority would leave a serious gap in consumer protections."

Consumer advocates agree. They argue a lack of competition among broadband providers creates a need for a strong FCC.

"The overall trend here is to strip away the authority of the FCC to prevent discriminatory practices ranging from personal privacy breeches to anticompetitive favoritism in the marketplace," said Gene Kimmelman, a director of the Internet Freedom and Human Rights project at the New America Foundation and former antitrust official for the Justice Department. "These telecom firms want as little oversight as possible."

Broad powers

The FCC has broader powers than other agencies, including the ability to create new rules that are aimed at heading off harmful behavior in the future.

An example of this was the agency's controversial "net neutrality" rules created in 2010, meant to prevent broadband providers from blocking competing Web sites. The rules also discourage allowing some firms to pay extra to have their services delivered faster to consumers.

Verizon and other critics said the rules were too constraining of business models they might pursue in the future, and that there were few examples of actual violations.

In contrast, the FTC and DOJ play more of a defensive role. As law enforcement agencies, they review mergers or bring enforcement actions against companies after investigating practices that are typically brought to their attention from complaints.

But telecom firms argue they have outgrown the FCC's original mandate, set out nearly a century ago, of doling out licenses for broadcast airwaves and regulating the telephone monopoly. They say the confusion over who should regulate broadband providers has led to too many agencies claiming oversight over their businesses.

In their meetings Thursday with House lawmakers, Leibowitz will argue for new legislation that consolidates data breach rules under the FTC. Today, telecom firms comply with privacy rules at the FCC, as well as laws enforced by the FTC and by individual states.

"Consumers would benefit when rules are consistent and businesses would rather have one clear law than a patchwork of multiple laws that sometimes conflict," Leibowitz said.

Cecilia Kang is a national technology reporter, writing about tech and Internet policies at the Federal Communications Commission and Federal Trade Commission and how regulations affect businesses and consumers.
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Brian Fung | September 12, 2013