FTC Annual Report Offers a Contrasting Perspective to Calls for a New Privacy Agency

On more than one occasion I have written pieces for the Free State Foundation arguing that online privacy oversight should take place exclusively at the federal level. More specifically, at the FTC, the expert agency with substantial institutional knowledge regarding, and experience with, this topic.

Members of both the House and the Senate, meanwhile, have drafted legislation that would transfer FTC authority to an entirely new agency. Two Representatives from Silicon Valley, Zoe Lofgren (D) and Anna Eshoo (D), introduced the Online Privacy Act in November 2019. As I described at the time, that bill would create specific consumer privacy rights (including the authority to access, correct, delete, and transfer personal data) and empower new bureaucracy, the independent Digital Privacy Agency, to enforce its provisions.

More recently, on February 13, 2020, Senator Kristen Gillibrand (D-NY) unveiled the Data Protection Act. The Data Protection Act would establish, and transfer authority previously held by the FTC to, the Data Protection Agency. Specifically, this new independent agency would "have all powers and duties under the Federal privacy laws to prescribe rules, issue guidelines, or to conduct studies or issue reports mandated by such laws, that were vested in the [FTC]…."

The FTC released a report on February 25, 2020, that serves as reminder of the important role that it plays. The Privacy & Data Security Update: 2019 offers an overview of the agency's enforcement efforts over the course of last year. A few highlights:

• A $5 billion penalty and additional restrictions imposed on Facebook for violating a 2012 Order – "the largest ever imposed on any company for violating consumers' privacy and almost 20 times greater than the largest privacy or data security penalty ever imposed worldwide;"

• A $5.7 million settlement with Musical.ly – now known as TikTok – regarding charges that it collected children's personal data in violation of the Children's Online Privacy Protection Act (COPPA);

• A $170 million penalty for YouTube and Google as a result of alleged violations of COPPA;

• A settlement with Equifax, totaling as high as $700 million, in response to a data breach affecting nearly 150 million people; and

• 13 enforcement actions against companies for allegedly making false promises relating to the EU-U.S. Privacy Shield framework.

Five Years After the FCC's Ill-Fated Title II Order, Broadband is Thriving

Five years ago today, the Wheeler/Obama FCC adopted its Title II Order, subjecting broadband Internet access services to public utility-like regulation. The Commission's imposition of Title II regulation was a heavy-handed reversal of the prior bipartisan consensus policy favoring a light-touch regulation of broadband Internet services. When the 2015 Title II Order was adopted, pro-regulatory Commissioners and advocates claimed that stringent new rules were absolutely necessary to save free speech on the Internet. And Title II regulation was touted as the only way to prevent the rise of broadband service "fast-lanes" that would divide the Internet between haves and have-nots. 

Thankfully, under Chairman Ajit Pai's leadership, the FCC changed course and repealed Title II regulation in the 2018 Restoring Internet Freedom Order. The RIFO concluded that Title II regulation actually harmed broadband investment and innovation, slowing deployment to all Americans. Now, five years after the Title II Order's adoption, none of the horror stories about broadband service provider speech suppression or fast lanes and slow lanes have materialized. 

Broadband subscribers are better off than they were five years ago, without Title II regulation. Since the repeal of the Title II Order, broadband investment has improved, wireless and wireline subscribers have risen, speeds have increased, data traffic has dramatically grown, and deployments of next-generation networks such as 5G wireless and gigabit wireline are underway. For more on this, see my September 2019 Perspectives from FSF Scholars paper, "Resurgence in Broadband Deployment Vindicates FCC's Pro-Investment Policies." And for a more recent look at the state of the broadband Internet services in this restored light-touch regulatory environment, see my Perspectives paper, "The Communications Market at 2020: The Competitiveness of Video, Mobile, and Fixed Broadband."

Come Hear Deputy AG Rosen's Keynote Address at FSF's Twelfth Annual Conference

The Free State Foundation will hold its Twelfth Annual Telecom Policy Conference on Tuesday, March 10, 2020, 8:30 AM to 2:45 PM at the National Press Club in Washington, DC. 

This year's conference includes a keynote address by U.S. Deputy Attorney General Jeffrey Rosen. 

Responses to Mr. Rosen's address will be provided by Alden Abbott, General Counsel at the Federal Trade Commission, and also by Thomas Johnson, General Counsel at the Federal Communications Commission.

Other distinguished keynote speakers and panelists have been added to the Conference's lineup. Be sure to register to attend. 

REGISTRATION IS COMPLIMENTARY, INCLUDING CONTINENTAL BREAKFAST AND LUNCH. BUT YOU MUST REGISTER TO ATTEND.

REGISTER NOW HERE!

#FSFConf12

New Book: "Modernizing Copyright Law for the Digital Age"

In Modernizing Copyright Law for the Digital Age: Constitutional Foundations for Reform, Randolph May and Seth Cooper connect constitutional principles and historical insights to recommendations for updating U.S. copyright law to meet the challenges of the Digital Age.

Copyright owners and copyright-intensive industries are vital engines of prosperity in our Digital Age economy. But current U.S. copyright law fails to protect adequately copyrighted works from infringement enabled by modern-day digitization and Internet connectivity. The law needs updating to curb the billions in economic losses caused annually by bad actors in America and abroad.

In reforms grounded in constitutional principles, Modernizing Copyright Law for the Digital Age addresses areas such as international trade, public contracts, private contracts, compulsory licensing and rate regulation, antitrust, and so-called moral rights. This timely book details steps that Congress should consider for updating copyright policy in hot-topic areas, including music royalties, Copyright Office reform, civil enforcement, criminal enforcement, and international protections.

The book is now available from Amazon here or from Carolina Academic Press here.

US Telecom Report for 2020 Spotlights Booming Broadband

Earlier this month, US Telecom released its report "Industry Metrics and Trends 2020: The Broadband Boom." Among the report's key projections for 2020:

• 84% of U.S. households (109 million) will subscribe to fixed broadband by the end of 2020;

• Wireless will account for 79% of voice connections, compared to 4% for traditional phone lines;

• 6% of U.S. households will use traditional phone lines, while 65% will be wireless-only and 29% will be Internet-based voice service, mostly from cable operators; and

• Traditional switched telephone subscriptions will be 24 million, down from 186 million in 2000. 

US Telecom's report data and projections regarding the decline of switched access lines and the concomitant rise of wireless and VoIP service are particularly striking, yet not at all surprising in light of trends over the last several years. 

A public policy implication of such dramatic declines in traditional voice services should be the elimination of the FCC's unbundling and resale regulations. The Commission has an ongoing proceeding in which it proposes to remove certain unbundling mandates. For more, see my February 13 Perspectives from FSF Scholars paper, "FCC Should Go Full Speed Ahead in Removing Unbundling Regulations."   

Cisco Report Looks Ahead to 2023's Internet

On February 18, Cisco released its "Annual Internet Report," which includes a forecast of mobile, Wi-Fi and fixed broadband up through 2023. Among the Cisco report's interesting projections for North America in 2023: 

• 345 million Internet users (92% of regional population), up from 328 million (90%) in 2018. 
• 329 million mobile users (88%), up from 313 million (86%) in 2018. 
• 5.0 billion networked devices/connections, up from 3.0 billion in 2018. 
• 25% of all networked devices will be mobile-connected and 75% will be wired or connected over Wi-Fi. 
• Average fixed broadband speed will reach 141.8 Mbps, a 2.5-fold growth from 2018 (56.6 Mbps). 
• Average mobile connection speed will reach 58.4 Mbps, a 2.7-fold growth from 2018 (21.6 Mbps). 
• Average Wi-Fi speeds from mobile devices will reach 110 Mbps, a 2.3-fold growth from 2018 (46.9 Mbps).

Interesting data points and projections concerning video viewing, cybersecurity, and more are also contained in the latest installment of Cisco's report.

George Washington: Pro-Copyright

Today, President's Day, the U.S. government observes George Washington's birthday. No doubt most people are aware of many of the accomplishments of the Father of our Nation. Yet comparatively few are aware that George Washington was pro-copyright. As President, he signed the first federal law protecting creative works – the Copyright Act of 1790. Free State Foundation President Randolph May and I discussed this and more in our 2016 Perspectives from FSF Scholars paper, "George Washington: Indispensable to Intellectual Property Rights in America."

Expect to hear more on copyright-related topics in 2020, as this month marks the publication of our new book with Carolina Academic Press, titled "Modernizing Copyright Law for the Digital Age: Constitutional Foundations for Reform." Hot off the press, our book is now available for order at CAP's website. 

Richard Epstein Previews Book on "The Dubious Morality of the Administrative State"

The Regulatory Transparency Project's "Deep Dive" Podcast #87 features a talk by Prof. Richard Epstein on "The Dubious Morality of Modern Administrative Law." Prof. Epstein's talk highlights themes from his book of that same title, to be published in March 2020. The event took place at UC Berkeley and featured a response by Prof. Daniel Farber. Prof. Epstein has written several incisive and provocative books on law and regulation. And based on his recent remarks at UC Berkeley, "The Dubious Morality of Modern Administrative Law" will surely be another important book worth reading. Prof. Epstein a Distinguished Adjunct Senior Scholar at the Free State Foundation.

Attorney General Barr Presses for U.S. Action Now on 5G

On February 6, Attorney General William Barr delivered the keynote address at the Justice Department's "China Initiative Conference" in Washington D.C. Attorney General Barr primarily addressed the technological and economic challenges posed to the U.S. by China in the areas of intellectual property theft and 5G dominance. His address is worth reading or viewing in full. (For C-SPAN, AG Barr's address begins about 1 hour and 26 minutes into the stream and his remarks on 5G begin at about 1 hour and 38 minutes in.)

In his address, AG Barr stressed the importance of making spectrum resources available for 5G services in the U.S. He specifically identified C-Band and L-Band spectrum as critically important for rapid deployment of 5G. From AG Barr's prepared remarks: 

The FCC has been working hard to get the C-band spectrum out into the market through an auction.  It is critical to get this done within the next few months.  Even then, the U.S. will need 400,000 base stations to cover the nation.  This could take a decade or more to build out. Recently, there have been interesting proposals to jump-start U.S.  5G by also making available L-band spectrum for use in tandem with the C-band.  By using the L-band for uplink, we could dramatically reduce the number of base stations required to complete national coverage.  It has been suggested that this could cut the time for U.S. 5G deployment from a decade to 18 months, and save approximately $80 million.  While some technical issues about using the L-band are being debated, it is imperative that the FCC resolves this question. The bottom line is that we have to move decisively to auction the C-band spectrum, and bring to resolution the issues over L-band.  Our economic future is at stake.  We have to bear in mind that, given the narrow window we face, the risk of losing the 5G struggle with China should vastly outweigh all other considerations.

Free State Foundation scholars have also advocated prompt action by the FCC to put C-Band and L-Band spectrum into commercial use. On February 6, FSF President Randolph May issued a statement regarding the FCC's proposed order to transition incumbent users in the C-band and clear for auction 280 MHz in that band. And my December 19, 2019 blog post, "FCC Should Green Light Wireless Services in L-Band Spectrum," urged prompt FCC decision on Ligado Networks' modified applications to deploy a satellite-terrestrial hybrid mobile network for commercial services in unused L-band spectrum.  

Importantly, AG Barr's keynote address also called attention to the pressing issue of 5G equipment suppliers and the need to have a market-ready alternative to Chinese 5G equipment suppliers. His call that the U.S. and its closest allies need to consider ways to put our large market and financial muscle behind viable competitors – insofar as it is carried out by by private American and allied companies – merits serious consideration. 

FSF President Randolph May on U.S. District Court's Decision in T-Mobile/Sprint Merger Case

Free State Foundation President Randolph May issued the following statement regarding the decision by U.S. District Court Judge Victor Marrero rejecting certain states' suit to block the T-Mobile/Sprint merger:

"I'm pleased that Judge Marrero has denied the attempt of a minority of states to second-guess the considered decisions of the Department of Justice and the FCC to allow the T-Mobile/Sprint merger to be consummated. In comments before the FCC and before the District Court, I explained that, all things considered, the merger was likely to increase competition and overall consumer welfare not only in today’s wireless marketplace but in the broader telecommunications marketplace as well.

The District Court properly recognized that the states bore the burden of persuasion of showing that the proposed merger would substantially lessen competition in the market for retail mobile wireless telecommunications services and that they failed to carry this evidentiary burden. Especially important is the court's recognition of the 'complexity and dynamism’ of the wireless market. Indeed, the court properly acknowledged that 'the intensely competitive and rapidly changing environment in which complex and dynamic markets operate' rendered unlikely, in the real world of the wireless market as opposed to the one conjured up in theoretical models, that the anticompetitive business strategies and market effects that the states predicted would occur.

Now that the District Court has ruled, my hope is that the states will forbear from further litigation and that the California Public Utilities Commission will quickly act on the merger. It's time to let the competitive and dynamic marketplace that Judge Marrero identified work to enhance consumer welfare."   

The 2020 Communications Market at a Glance

My Perspectives from FSF Scholars paper, "The Communications Market at 2020: The Competitiveness of Video, Mobile, and Fixed Broadband," was published on January 30. Drawing on reports by industry, market analysts, and government agencies, my Perspectives paper showed that the digital communications market is robust and dynamic, with American consumers benefitting from next-generation technology deployments, new service offerings, and competitive prices. Indeed, available data indicates that, over the last two years, competitive conditions across video, mobile, satellite, and other digital communications service sectors have remained strong and, in many instances, improved. Below is an Infogram that offers a quick glance at competitive trends in the communications services market. (For desktop computers, the Infographic may be best viewed when opened and zoomed in a new window.)

Report Compares Countries' Progress on 5G Spectrum Availability

On February 3, Analysys Mason released the latest update in its series on the global race to 5G.  In "International Comparison: Licensed, Unlicensed, and Shared Spectrum, 2017-2020," U.S. efforts to make new spectrum resources available for 5G network services are measured against efforts by several foreign nations, including Canada, China, Germany, North Korea, and the U.K. The report includes a useful chart comparing spectrum resources that each nation has made available for commercial use for 5G services since 2017 as well as spectrum expected to be available for 5G in 2020. 

One important step the U.S. can take in 2020 to further our nation's position in the race to 5G is ensure a prompt auction for C-Band spectrum that incentives incumbents to vacate the spectrum and cooperate in a speedy transition to prospective auction winners. In this regard, see Free State Randolph May's statement from February 6 regarding the FCC's plan to repurposing C-Band spectrum.

FSF President Randolph May Reacts to FCC's C-Band Satellite Proposal

The following statement may be attributed to Free State Foundation President Randolph May regarding the FCC's proposal for repurposing C-Band spectrum:

The FCC's proceeding looking to repurpose the C-Band is one of the most complex proceedings before the Commission, but surely one of the most important. The objective is to free up much needed valuable mid-band spectrum so that it is available for wireless operators to expand and enhance their networks to provide next-generation 5G services, while ensuring that incumbent providers in the band are able to continue to provide important services to cable operators and other video distributors with minimal disruption.

Importantly, there is widespread agreement that time is of the essence in repurposing the C-Band spectrum if the U.S. is not going to fall behind China and other countries in building out 5G networks. So, I readily commend FCC Chairman Ajit Pai for his diligence and hard work in keeping the FCC on track to act in a timely fashion.

The plan Chairman Pai announced today is a thoughtful effort to balance the various interests in a way that advances overall consumer welfare and the national interest. Because speed in repurposing the C-Band spectrum is all-important, providing sufficient compensation to the incumbent satellite operators to incentive their active cooperation and avoid litigation that might derail implementation is a key objective. In that regard, to ensure the prospect of sufficient payments, I might prefer a compensation plan that ties payments to incumbent satellite providers to the value of the spectrum to be auctioned. That said, while I haven't seen the details of Chairman Pai's plan and reserve judgment, the proposal contemplating that the satellite operators could receive up to $9.7 billion in accelerated relocation payments if certain repurposing timelines are met appears to be a meaningful step in the right direction of providing a sufficient incentive for the incumbent providers to cooperate.    

FCC Chairman Pai is Luncheon Speaker at FSF's Twelfth Annual Conference

The Free State Foundation will hold its Twelfth Annual Telecom Policy Conference on Tuesday, March 10, 2020, at the National Press Club in Washington, DC. The Luncheon speaker is FCC Chairman Ajit Pai. Registration is now open.

Other keynote speakers at the upcoming conference include:

• U.S. Deputy Attorney General Jeffrey Rosen
• FCC Commissioner Michael O'Rielly
• FCC Commissioner Brendan Carr
• Former FCC Commissioner Mignon Clyburn
• FTC Commissioner Christine Wilson

Confirmed speakers at the conference also include:

• Alden Abbott – General Counsel, FTC
• Jim Cicconi – Sr. Executive VP-External and Legislative Affairs, AT&T
• Maurita Coley – President and CEO, Multicultural Media, Telecom and Internet Council
• Thomas Johnson, General Counsel, FCC

REGISTRATION IS COMPLIMENTARY, INCLUDING CONTINENTAL BREAKFAST AND LUNCH. BUT YOU MUST REGISTER TO ATTEND.

REGISTER NOW HERE!

#FSFConf 12

A Sensible Decision on Statutory Damages for Copyright Infringement

On January 15, the U.S. Court of Appeals for the Fifth Circuit issued an important decision on statutory damages for civil copyright infringement claims in Energy Intelligence Group, Inc. v. Kayne Anderson Capital Advisors, L.P. The Fifth Circuit decided that failure to mitigate damages is not a complete defense to liability for statutory damages under the Copyright Act and the Digital Millennium Copyright Act, but only a factor for a court to consider in setting the amount of damages awarded within the range provided in the statute. The court intelligently grounded its decision in the underlying deterrence and punitive purposes of the statutory damages provisions contained in federal copyright law. In its brief historical overview of statutory damage provisions, the Fifth Circuit called attention to the Copyright Act of 1976 and wrote:  

In light of these revisions modern statutory damages are even more clearly "designed to discourage wrongful conduct" and may be imposed to “sanction and vindicate” the statutory policy against copyright infringement… Modern appellate decisions continue to emphasize this deterrence purpose, particularly where the defendant’s infringement was willful. 

Also:

Statutory damages under the Copyright Act…are not solely intended to approximate actual damages. They serve purposes that include deterrence. Statutory damages under the Copyright Act are therefore distinct from the type of damages that are typically calculated according to rules of mitigation.

Free State Foundation President Randolph May and I discuss history of civil copyright enforcement in our 2018 Perspectives from FSF Scholars paper, "Modernizing Civil Copyright Enforcement for the Digital Age Economy." Also, on January 10 we published our Perspectives paper, "The Constitutional Foundations of Strict Liability for Copyright Infringement."