OTI Submits Comments to the Federal Trade Commission Regarding Broadband and Privacy

On August 20, OTI filed several sets of comments with the Federal Trade Commission (FTC) as part of the Commission’s effort to seek comment and hold hearings on competition and consumer protection in the 21st century. The comments cover broadband competition and policy, data portability and interoperability online, the importance of intellectual property in encouraging competition, and how the Digital Standard can aid FTC enforcement efforts.

Broadband Competition and Policy

The broadband market lacks competition and is prone to consumer abuse. (OTI filed related comments on these points with the Federal Communications Commission (FCC) last week). Head-to-head competition between broadband providers is rare. So-called “facilities-based” competition, the idea that different network technologies would compete against each other, has failed to materialize. DSL, satellite, and wireless are all technically inferior to cable and fiber, and cable and fiber are rarely built out to rural areas.

Broadband providers also engage in anticompetitive behavior that has limited competition. The companies have divided the country to create regional monopolies, make it difficult for customers to switch providers through punitive fees and being opaque about their practices, and broker deals with landlords of buildings so residents have only one option for broadband. They also ignore low-income and rural communities when building new infrastructure, which is known as “digital redlining.”

While the FTC is not the proper agency to address consumer protection issues related to broadband (that authority, as OTI has repeatedly argued, should be at the FCC), it should still vigorously enforce Section 5 against broadband providers while the FCC lacks authority. To properly do so, the FTC should clarify and strengthen its unfairness and deception standards.

Data Portability and Interoperability Online

As both the FTC and Congress engage in much-needed efforts to enhance the privacy and security of consumers’ personal data, policymakers must simultaneously seek to ensure that consumers’ control over their data is also strengthened through broad access to data portability tools and interoperable services. Otherwise, attempts to rein in tech giants’ privacy practices may have the unintended effect of locking in their dominance by making it harder for consumers to switch services or leverage their own data elsewhere. Giving consumers real control over their data requires both privacy and portability.

Issues around data portability and interoperability present many thorny privacy questions—questions like, what data should be exportable? What should platforms do about extracting data relating to a user’s friends on one service and moving that information to another service? These questions need answers, and the FTC can help. The Commission should continue to play its role as fact-finder and investigator and provide clear guidance to companies once it develops a record through this and other proceedings. It should also incorporate an investigation of data portability and interoperability practices into its merger review, and ensure that mergers do not raise the barrier to entry for other competitors through anticompetitive practices in this regard. For example, the Commission could require the implementation of meaningful portability and/or interoperability offerings as a merger condition, as was the case in the 2001 AOL/Time-Warner merger. And last, it should make sure that any increased privacy protections do not undermine data portability or interoperability.

The Importance of Intellectual Property in Encouraging Competition

Recently, OTI issued a detailed report describing how the lack of enforceable reasonable and non-discriminatory (RAND) licensing requirements in an FCC broadcasting order help Sinclair Broadcasting Group dominate the future of the broadcasting industry. Sinclair holds a patent over a crucial technology for implementing the next-generation TV broadcast standard, “ATSC 3.0.” The combination of that patent and the lack of RAND licensing requirements means that Sinclair has control over which of its competitors and customers can access the new technology—it can license the technology to any company for any fee, no matter how exorbitant, or it could simply not license it out at all. In the coming years, as the ATSC 3.0 rollout intensifies and consumers begin to reap its benefits, the FTC should keep a close eye on how Sinclair uses its patent to thwart competition. The FTC should also examine whether standards-setting organizations and regulatory agencies (like itself) have the ability to properly enforce RAND licensing requirements to ensure fair access to patented technology.

How the Digital Standard Can Aid FTC Enforcement

The remedial authority of the FTC to hold companies accountable for privacy violations or data breaches is extremely important in encouraging companies to take steps to protect the security and privacy of their users. However, these processes and authorities do not necessarily stop the products from getting into the hands of users. Consumers, specifically, are not the audience for FTC enforcement mechanisms.

The Digital Standard can help fill that gap. As a consumer-focused digital security project, its goal is to educate people about the privacy and security aspects of the internet-connected devices they are thinking of purchasing. If it is successful, the Digital Standard will work to place pressure on manufacturers to implement better consumer protection practices by way of educating consumers, complementing the FTC’s enforcement authority.

Conclusion

OTI looks forward to continuing to engage with the FTC as the agency further seeks comment and holds hearings on vital consumer protection issues.