The following is an edited excerpt from comments filed by NCTA–The Internet & Television Association in response to the Federal Trade Commission’s request for input on competition and consumer protection in the 21st Century in advance of a series of hearings beginning this fall.
NCTA welcomes the FTC’s comprehensive review of the dynamic communications industry — the first undertaking of its kind since 2007, when the FTC issued its Broadband Connectivity and Competition Policy Report. Eleven years ago, that report concluded that burgeoning competition and innovation in the rapidly evolving internet marketplace warranted a cautious approach to broadband regulation and, in the absence of demonstrable consumer harm, a reliance on market forces to produce the best results for the American public.
That view was correct then and is even more demonstrably so today.
For instance, in 2007, the iPhone was introduced and revolutionized how and when Americans access the internet; today, 83% of Americans access the internet on mobile devices (over licensed Commercial Mobile Radio Services, or CMRS, networks and via extensive WiFi networks) and, as the nation transitions to next-generation 5G networks, the number of mobile internet users (and mobile-only internet users) will continue to increase. In 2007, Netflix had just introduced its streaming service after spending the first decade of its existence as a DVD and VHS rental company; today, Netflix has over 57 million streaming subscribers in the United States (more than twice as many subscribers as any other video distributor) and a total of about 130 million subscribers around the world. In 2007, Google was continuing to develop its digital advertising business, while Facebook was a bit player; today, the two companies together have a dominant share of sales in the digital advertising marketplace, and account for a huge majority of the growth of that market in 2017, with no other competitor cracking even 5%.
FAANGs Bearing Power
The total market capitalization of the five largest internet platform providers (Facebook, Apple Amazon, Google and Netflix) stands today at a staggering $3.48 trillion; by comparison, the combined market capitalization of the five largest internet-service providers by subscriber count is only one-fifth of that figure, or $703 billion.
Indeed, since the birth of the internet, an astounding number of competitive, communications platforms have emerged — none of which has ever been subject to intrusive forms of prophylactic regulation.
It is against this backdrop that the FTC should undertake its re-examination of the communications marketplace — a remarkably dynamic arena warranting a holistic approach to regulatory policy and enforcement. At a minimum, there is plainly no reasonable basis in today’s marketplace for singling out ISPs for unique regulatory burdens. To the contrary, recent experience suggests that large internet platform providers pose a greater risk to Internet openness and consumer privacy than ISPs. Any such risks can best be addressed through a combination of market forces and an evenhanded application of the FTC’s well-established authority to pursue case-by-case enforcement where necessary to prevent deceptive or unfair business practices or anticompetitive conduct.
The FTC appropriately asks how best to “harmoniz[e]” oversight of the internet ecosystem at the federal and state levels. NCTA believes this is a vitally important task to ensure that businesses within the internet ecosystem can operate with certainty while consumers are able to enjoy clear and consistent protections on net neutrality, privacy, data security, and other related matters nationwide. The FTC should ensure that the internet is subject to uniform, consistent federal regulations, including by issuing guidance explicitly setting forth that inconsistent state and local requirements are pre-empted. It is critical that the FTC maintain this understanding and ensure that state enforcement agencies exercise their competition and consumer protection authority only in a manner that does not conflict with specific requirements under federal law or broader federal policy objectives in the broadband context.
While states are not altogether prohibited from taking enforcement action against ISPs under state laws prohibiting unfair practices and fraud, they must do so consistent with controlling federal law and policy governing the broadband marketplace. State-by-state regimes threaten to upset efforts to establish a uniform federal regulatory scheme and can wreak havoc on businesses across the internet ecosystem.
States Should Follow Precedent
The FTC should issue guidance to state attorneys general and consumer-protection agencies reaffirming they are bound by FCC and FTC precedent in this arena.
The need for a uniform national framework extends to privacy and data security protections for online data as well. Balkanized privacy regulation that differs from state to state would only confuse consumers.
For example, California’s recently enacted California Consumer Privacy Act of 2018 imposes numerous requirements that differ from, and even conflict with, federal law. Moreover, a patchwork of state-level rules applying only to BIAS providers would undercut existing federal policy basing enforcement on what information is collected and how it is used, rather than on who is collecting the information. Any FTC guidance to state entities on the need to ensure consistency with FTC and FCC policy and precedent in the internet arena thus should cover privacy and data protection issues as well.