FCC Drops the Hammer on Broadband Companies

Stan Ward

Stan Ward

October 31, 2016

In a milestone ruling that will bring the US closer to Europe on the issue of online privacy, the FCC, by a vote of 3-2, has approved a bevy of new rules to protect users’ privacy. As a result, broadband behemoths such as Comcast and Verizon will be prohibited from collecting and disseminating (read: selling) information about users  – such as the websites they’ve visited, and the apps they’ve used.

Additionally, broadband providers, according to the new regs, must obtain permission from subscribers to gather and give out data on their web browsing, location, and financial information.  Neither will they be allowed to transmit health data, financial information, Social Security numbers, and the content of emails and other digital messages without the user’s okay.

Before you get too giddy, though, and without trying to diminish their importance, the sweeping rules don’t apply to the more avaricious online ad titans – including Google, Facebook, and other web companies. These are not subject to the new decrees, because the FCC does not have jurisdiction over web companies. This is a pity, as these are considered by many to be the most annoying ad abusers of consumers.

Some observers say it’s about time that the pendulum swung toward the consumer, and applaud the FCC’s action. “It’s the consumers’ information,” said FCC Chairman Tom Wheeler. “How it is used should be the consumers’ choice. Not the choice of some corporate algorithm.” Naysayers, and those who oppose the move, will point out that it was just another partisan vote by Obama appointees who invariably vote against big companies who historically support Republicans. According to the New York Times,

The F.C.C initiative is a continuation of a years-long effort to bring regulation of Internet companies in line with those of traditional telephone companies.  The F.C.C. proposed the broadband privacy rules in March. That followed the reclassification of broadband last year into a utility-like service, a move that required broadband to have privacy rules similar to those imposed on phone companies.

This ruling also comes at a time when regulators have struggled to keep abreast of the changes of the Internet era, where creating different categories of personal information and the parallel race to monetize them with ads, has been gaining increasing speed.  The pace is evident as traditional network companies attempt to merge with online content companies, much to the chagrin of the government.

Regulators point to Verizon’s acquisitions of AOL and Yahoo, which are both aimed at monetizing internet usage beyond the straightforward sale of broadband access, as evidence of the need to thwart this trend. Their hope is that the new sweeping regulations will slow the pace of, if not totally derail, the offensive.

That Google and Facebook, which also use personal data for advertising purposes on a tremendous scale, escape the regulator’s wrath, irks the broadband companies. They point out that they are being unfairly constrained by regulation at a time when the fast-growing digital advertising market is exploding.

Don’t be fooled by the giants’ affected by this ruling protesting too much, or crying wolf. AT&T, Verizon, and Comcast will also still be able to gather consumers’ digital data, though not as easily as before. The FCC rules apply only to their broadband businesses. In addition, in the past, these companies have been able to purchase customer information from data-brokers.

Usually, whenever government intervenes in the free market with added regulations, it comes with a cost that is usually ultimately passed on to the consumer. Indeed, opponents of this latest FCC ruling argue that, if companies can’t raise revenues from advertisers, they will have to make up the shortfall elsewhere – meaning from consumers. As is always the case, the proof will be in the pudding, and only time will tell if what appears to be a victory for privacy doesn’t come with a price tag to match.

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