Senate Committee Weighs Internet Provider Rules

WASHINGTON (CN) - Senate Republicans on Wednesday blasted the FCC's proposed rules regulating how Internet service providers use customer data, while Democrats defended it as necessary in the age of an open Internet.

In March, the Federal Communications Commission (FCC) proposed rules that would require Internet service providers, or ISPs, to obtain consent before using or sharing some types of information about their consumers. The proposal would also require ISPs to take "reasonable steps" to keep customer information safe and follow certain notification procedures in the event of an information breach.

The proposed rules come in response to the FCC's decision to treat the Internet as a "common carrier," preventing ISPs from blocking content due to its source or creating "fast lanes" for certain types of content.

Some at a Wednesday afternoon hearing before the U.S. Senate Subcommittee on Privacy, Technology and the Law — including representatives of the FCC, FTC and committee Republicans — criticized the proposed rules as unduly harsh on ISPs while ignoring other services that have access to similar consumer data.

"It makes no sense to give some companies greater leeway under the law than others, when all may have access to the very same personal data," FCC Commissioner Ajit Pai said at Wednesday's hearing. "Search engines log every query you enter. Social networks track every person you've met. Online video distributors know every show that you've streamed, and yet the FCC burdens one niche of the marketplace with asymmetric regulation."

Because up to 70 percent of information accessed via broadband Internet is encrypted, ISPs have "just a smidgen" of information possessed by other websites or providers, meaning the proposed rules target the wrong parties, Pai said.

Instead of the new FCC rules, Pai favored the "light-touch" regulatory approach the FTC used to ensure consumer privacy on the Internet before the common carrier ruling.

The new rules would regulate only ISPs, which Pai said would mean content providers, commonly known as edge providers, would not be subject to the same regulations. He also suggested the new rules could stifle innovation on the Internet.

"I think it's a fair statement to argue that the Internet economy we have, that is the envy of the world, is due in part to the fact that the FTC applied uniform framework and a very flexible case-by-case approach to allow entrepreneurs across the ecosystem to experiment consistent with consumer preferences," Pai said.

Republicans on the committee sided with Pai, arguing the FCC's proposed rules overstep the agency's boundaries.

"There are widespread concerns that the proposed rules are another step in the FCC's attempt to become the policemen of the Internet," said. Sen. Jeff Flake, an Arizona Republican who chaired the hearing.

But FCC Chairman Thomas Wheeler vigorously defended the rule during the hearing, calling it necessary to ensure privacy on the open Internet.

"There's long been a big difference between information created by a consumer's transaction with a third party, which is a matter of choice, and the information the consumer has no choice but to provide in order for the network to connect with that third party," Wheeler said.

Comparing them to regulations that have long governed what information phone companies can share about the calls they carry, Wheeler called the proposed rules an example of evolving technology.

"The issues aren't new, nor is the FCC's expertise," Wheeler said.

He made a distinction between edge providers, which collect data when a user directly navigates to their page or application, and ISPs, which collect data just by having consumers use the network. An ISP should not be able to make money off of the knowledge that its customer went to WebMD for simply carrying the traffic there, Wheeler said.

"Let me say that we're in favor of them being able to monetize it, they just need to be able to ask permission of the people whose information it is," Wheeler said. "The fact that I hire the network to take me to prostatecancer.net does not give them the right to my information."

Sen. Al Franken was Wheeler's main defender throughout the hearing, which quickly developed into a back and forth between Flake and the Minnesota Democrat, who took turns lobbing questions to their sympathetic witnesses in order to illustrate their positions.

Franken was skeptical at times about what Flake and Pai would like to have if not the FCC's proposed rules.

"I'm a little confused about what your goal is here," Franken said.

Pai responded by telling Franken he wanted to allow the FTC to continue to handle privacy regulations, as it did in the years before the net neutrality decision.

Wheeler later told Franken the opposition to the proposed rules could be dangerous, calling the criticism demanding edge providers and ISPs be treated the same an "artful reframing" of what people have long considered as a network's role.

"It's crucial that we understand that this is a retreat from privacy," Wheeler said, referring to what would happen if the FCC rules did not take effect. "This is a retreat from what Americans have always expected from their networks."

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