FCC on 'Collision Course' With Privacy This Fall, O'Rielly Warns

The FCC will face a “collision course” when Chairman Tom Wheeler embarks on privacy regulation later this year, O’Rielly warned. He criticized the way the FCC has already begun investigating that arena. An AT&T executive feared the track the FCC is on Monday (see 1508170039). One touchstone during the Tuesday panel was the recent civil penalty levied against TerraCom last month (see 1507090035), which involved the company’s admitted lack of protection of thousands of consumers’ confidential information.

“If you look at the statute, PII [personally identifiable information],” O’Reilly said, “that’s not in the statute. … We are reinterpreting and creating definitions that don’t exist in the law.” He criticized what he saw as the headline-grabbing side to FCC enforcement and worried about what the regulations in general meant for industry. “We’re going to double agencies and double regulations for providers,” O’Rielly said. “How am I trying to navigate this universe with the same data with so many regulators in front of me?”

“I didn’t have a problem with the TerraCom decision,” Clyburn said, citing “quite a few interactions and briefings on this” within the FCC. “I believe that the FCC had a duty, was aware of it, and had a duty to act.” She mentioned Communications Act Section 222(a), which talks about an agency duty to protect proprietary information. The commission had a duty to say to companies that “you will not have a casual arrangement or lack of arrangement with somebody’s personally identifiable information,” Clyburn asserted.

Sidley Austin data security and privacy attorney Alan Raul, speaking from the audience, questioned the “vast discretion” of the FCC in penalties: “Isn’t there a fairness issue?” Clyburn said consumers can't get another social security number if one is compromised, a “serious” violation warranting FCC action.

David Redl, GOP chief telecom counsel for the House Commerce Committee, also criticized what he saw as FCC overreach on privacy, speaking on a different panel Monday. “They’ve told us, 'We’re going to go forward,'” Redl said, criticizing the FCC for going past what Section 222 says on customer proprietary network information and perhaps pursuing PII.

“What’s more proprietary than your Social Security number?” Clyburn asked Tuesday.

But Section 222 “is fairly narrowly written,” O’Rielly cautioned. “It deals with telephone records.” Congress would need to grant the agency authority for its expansion, he said.

The commissioners expressed broad agreement on details of the Lifeline program overhaul, both saying it needed changes but emphasizing different changes. O’Rielly pressed his desire for a cap to the program. “The right cap, we’ll talk,” Clyburn told O’Rielly. “Or a budget.” Any budget framework “should take into account as close to 100 percent as possible, I believe,” she said, saying many eligible people don't subscribe to the Lifeline program. “If it’s not used, it’s not spent. … I would not endorse anything that would foreclose opportunities.” A “non-negotiable” point for Clyburn is that carriers shouldn't be responsible for certifying subscribers, she said, slamming the troubled incentives that creates. “This is a 30-year-old program and to establish a cap that just looks at one year or one snapshot in time, that would in essence foreclose the opportunities for 60 percent of those eligible, was not something I was willing to sign up for.”

“This is the one piece that doesn’t have a budget” out of universal service programs, O’Rielly said. “We can figure out how best to get to home.” Ideally, he would love a “5-0 scenario” on the commission, he said.

Both Clyburn and O’Rielly talked of the potential need for means testing. Clyburn worried of subsidies flowing to Disney World and potentially to wealthy individuals, such as in Aspen. “Means testing would be very applicable in this space.” O’Rielly. said. “We do fund consumers who are extremely wealthy, and I don’t think that makes as much sense.” Clyburn raised the same concerns, saying “poor people are not getting their proportion of what they’re paying in, what they’re taxed for. … That money is flowing to Disney World and probably Aspen.”