Photographer: Andrey Rudakov/Bloomberg

Republican Red-Tape Purge May Help AT&T, Comcast Use Data

Updated on
  • Congress considering rollback of FCC’s online privacy rule
  • Broadband companies can use data to compete for online ads

The war on regulations has a new target: an Obama-era privacy rule that internet-service providers say would make it harder to compete in the burgeoning market for online ads touting everything from shoes to vacations.

Republicans in Congress are moving to kill a requirement that companies such as AT&T Inc. and Comcast Corp. get a subscriber’s consent before using and sharing sensitive information about internet and app use.

“We are in real trouble,” said privacy advocate Jeffrey Chester, executive director of the Center for Digital Democracy, a Washington-based policy group that supports keeping the regulation. Proponents of eliminating the rule are saying that “it’s OK for the big phone and cable companies to spy on Americans,” Chester said.

Cable and telephone companies, as well as advertisers, are urging quick action by lawmakers to clear the way for them to compete in the online advertising market now dominated by web-based rivals such as Alphabet Inc.’s Google and Facebook Inc. The U.S. market generates about $70 billion per year, and is expected to exceed $100 billion by 2020.

Lawmakers expect Republican Donald Trump, who has vowed to “slash unnecessary regulations,” to sign the death warrant of the privacy rule, just as he’s signed other measures reversing rules passed late in the presidency of his Democratic predecessor, Barack Obama. Lawmakers are invoking a procedure called the Congressional Review Act that was little used until now.

The regulation at issue was passed in October by the Federal Communications Commission, which had a Democratic majority at the time. It requires broadband providers led by AT&T, Verizon Communications Inc., Comcast and Charter Communications Inc. to ask customers before using web-browsing and app use history for ads. Many customers, when asked, decline.

Right now, cable and phone companies can track internet customers from website to website unless customers tell them to stop. The rule hasn’t taken effect as it undergoes months-long White House analysis of the information-collection burden it poses on industry.

Facebook, Google

The rule wouldn’t cover big web-based data inhalers such as Google, Facebook and Yahoo! Inc. Such companies have 70 percent of the online ad market today, Bloomberg Intelligence analysts Tamlin Baslon and Matthew Schettenhelm said in an Oct. 31 note. The web companies don’t -- and won’t -- need advance permission to meld data about browsing habits.

Broadband companies say internet users will be flummoxed by the different standards.

“Consumers deserve clarity” and the FCC rules create “a confusing double standard,’ said Jonathan Spalter, president of USTelecom, a Washington-based trade group with members including AT&T, Verizon and CenturyLink Inc.

The rule can make it harder for AT&T to merge information about its wireless customers with data about their video viewing, and deny Verizon a free hand to tie subscribers’ web-browsing information with patterns learned at the web portals run by its acquisition target Yahoo Inc., according to BI’s Baslon and Schettenhelm.

‘Economic Health’

The regulation “threatens the economic health of broadband providers” who wouldn’t be able to use data about users’ habits to provide precisely targeted ads, groups including USTelecom and cable’s NCTA - The Internet & Television Association, which has Comcast as a member, said in a March 7 letter asking the Senate to help kill the rule.

Advertisers, too, have added their voice. The rule “will be disastrous for advertisers who seek to use consumers’ data to target relevant and meaningful advertisements,” the Association of National Advertisers, which represents 1,000 companies with 15,000 brands, said in a blog post.

Congressional Republicans say they’re eager to move.

“We look forward to rolling back these anti-consumer rules,” said Representative Marsha Blackburn, a Tennessee Republican who chairs the House telecommunications subcommittee. She introduced the House’s version of a congressional disapproval measure on March 8.

Killing Obama’s Rules? Congress Has an Act for That: QuickTake

A day earlier Senator Jeff Flake, an Arizona Republican, offered identical language, saying the FCC’s rule is “unnecessary, confusing and adds yet another innovation-stifling regulation to the internet.” Flake’s resolution has attracted support from more than 20 other senators, including the majority leader, Senator Mitch McConnell, whose backing can be crucial to a measure’s success.

The Senate could vote on Flake’s measure this week, Senator John Cornyn, a Texas Republican who is a member of the chamber’s leadership, said in an interview March 21.

The rollback is taking place under the Congressional Review Act, which lets Congress kill recently passed regulations on a simple majority vote of both chambers, and with the president’s signature. The method was used to kill a rule just one time before this year.

Under Trump, lawmakers have voted to rescind nine rules and the president has signed three of the measures, according to the policy group Public Citizen that supports the stricken rules. Rules killed would have prohibited gun sales to mentally impaired people, protected streams from coal mine waste, limited hunting for predators in Alaskan wildlife refuges, and forced oil, gas and mining companies to disclose payments to foreign governments.

The mechanism leaves advocates of the regulations fighting a rearguard action.

“The FCC should strengthen the privacy rules recently adopted, not weaken them,” Marc Rotenberg, president of the Electronic Privacy Information Center, a Washington-based policy group, said in a March 8 letter to Senator John Thune, the South Dakota Republican and chairman of the Commerce Committee.

FTC v. FCC

If Congress doesn’t act, rule opponents appear to have an ally in FCC Chairman Ajit Pai, a Republican who voted against the regulation last year, when he was a member of the commission’s minority. On March 2 Pai suspended a portion of the rule that was about to go into effect. Groups representing wireless and cable providers have asked the agency to withdraw the rules.

Pai has focused on the discrepancy between the FTC and FCC rules. He wants one system, he told an audience in Pittsburgh on March 15.

“Our goal is to have a uniform system, a level playing field that recognizes consumer’s uniform expectation of privacy,” Pai said. “We don’t want the government singling out one particular sector of the industry for more onerous or more favorable treatment.”

At the Pittsburgh event Marvin Sirbu, a professor at Carnegie Mellon University who advises the FCC on technology matters, told Pai different rules may be justified because internet users can choose among different websites and their privacy policies, but often have a single choice for broadband service.

Pai disagreed, saying consumers want to know if their information is being protected and aren’t concerned with “the market share” of broadband companies or search engines. "I would think the consumer would say, I want that information protected -- I could care less who is handling it,” Pai said.

The legislation is S. J. Res. 34 and H. J. Res. 86.

— With assistance by Scott Moritz

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