Maine May Join the State Privacy Law Club

Might the Pine Tree State in 2024 become the fourteenth state to pass a comprehensive data privacy law – and thereby further compound the problem of multiple, conflicting state statutes? It's possible. The Maine legislature's bicameral Judiciary Committee considered "An Act to Create the Data Privacy and Protection Act" (LD 1977) at a hearing two weeks ago.

LD 1977 is modeled on the American Data Privacy and Protection Act (ADPPA), a piece of federal legislation that easily cleared the House Commerce Committee back in August 2022 before losing forward momentum. That LD 1977 takes its lead from the ADPPA is somewhat ironic, as one of the primary motivating factors driving the ADPPA was the problem of a "patchwork" of state-specific laws, a problem that LD 1977 threatens to exacerbate.

To make matters worse, LD 1977 problematically diverges from the ADPPA by including an extremely broad private right of action. Specifically, Section 9620(2) states that:

A violation of this chapter or a rule adopted under this chapter with respect to the covered data of an individual constitutes an injury to that individual. The injured individual may bring a civil action against the party that commits the violation, except that an individual may not bring a civil action against a small business.

Possible remedies include actual damages or statutory damages starting at $5,000 per violation, whichever are greater; punitive damages; attorney's fees and costs; and injunctive and declaratory relief. A "small business" is a "covered entity" or "service provider" (but not a "data broker") that (1) generates less than $41 million in annual revenues, and (2) does not collect or process the personal data or more than 200,000 individuals.

Something else to consider: as I described in "Maine's ISP-Only Privacy Law Will Not Protect Consumers," an April 2020 Perspectives from FSF Scholars, Maine adopted a privacy law in June 2019 that singles out broadband Internet service providers (ISPs), requiring them – but not other participants in the broader online ecosystem, such as "edge providers" like Alphabet, Meta, and Amazon – to obtain "opt-in" consent from customers before using their personal information.

At an absolute minimum, any additional privacy legislation must acknowledge – and address – this disparate treatment of broadband ISPs.

Biden Administration, Democratic Senators: Fund the Affordable Connectivity Program

As the clock ticks steadily toward the moment in early 2024 when the Affordable Connectivity Program (ACP) runs out of money, the Biden White House and a group of 32 Democratic Senators recently added their voices to the bipartisan chorus calling for additional funding.

Created by the Infrastructure Investment and Jobs Act (IIJA), the ACP provides a monthly subsidy – up to $75 on qualifying Tribal lands and in certain high-cost areas, $30 elsewhere – that eligible lower-income households can apply toward a high-speed Internet access subscription. It also makes available up to $100 for the purchase of a connected device.

At the end of August, more than 20 million households had signed up for the ACP. Consequently, it is expected that the $14.2 billion initially appropriated will have been spent by some point early next year.

In an August 2023 post to the FSF Blog, I highlighted calls, from both sides of the aisle, for Congress to appropriate additional money to the ACP. I also noted that Free State Foundation President Randolph May, on multiple occasions, has urged Congress to extend the ACP – but also to "revise the program's eligibility requirements to target its limited resources to those most in need."

More recently, panelists at a Broadband Breakfast online event on October 11, 2023, spoke of the ACP's importance – one, Debra Lathen, President, Lathen Consulting LLC, described it as "critical" to the success of the $42.45 billion Broadband Equity, Access, and Deployment (BEAD) program.

In addition, 32 Democratic Senators, led by Jacky Rosen (NV), wrote in a letter to congressional leaders dated October 19, 2023, that, "as you finalize a government appropriations package, we urge you to include full funding for the ACP as well as a long-term solution that provides a sustainable, responsible funding stream, so that millions of Americans don't lose access to critical connectivity services."

And in an October 20, 2023, letter to House Speaker Pro Tempore Patrick McHenry, Shalanda D. Young, Director of the Office of Management and Budget, highlighted the importance of additional funding to "avoid the risk that millions of Americans lose access to affordable high-speed internet."

According to Communications Daily (subscription required), the White House is "is expected to seek about $4 billion in additional money for the [ACP] as part of a second part of the supplemental federal funding request it will send to Congress this week."

MEDIA ADVISORY: FSF Scholars Submit Ex Parte Regarding the FCC's Digital Discrimination Proceeding

Free State Foundation President Randolph May and Director of Communications Policy Studies Seth Cooper submitted the attached written ex parte presentation to the FCC emphasizing the importance of the agency following Congress’s directive to account for “technical and economic feasibility” in considering alleged complaints of digital discrimination. Below are two paragraphs excerpted from the beginning of the ex parte submission:

In Section 60506(a) of the Infrastructure Investment and Jobs Act of 2021, Congress expressly stated that, in implementing the Commission's mandate to take steps to ensure that all Americans benefit from equal access, the agency must consider issues of “technical and economic feasibility.” Congress thereby dictated that broadband providers must remain free to make informed business judgments regarding matters such as the size of their investments in relation to the availability and cost of capital, the geographic reach of planned deployments by the provider and competitors, the cost of the underlying technologies employed considered for deployment, the timing of new deployments, and other similar considerations. They are all market-related factors affecting economic feasibility assessments.

The congressional requirement that economic feasibility factors be taken into account requires acknowledgement by the Commission that deployment and non-deployment decisions of broadband providers to certain locations routinely, and necessarily, involve business judgements that have absolutely nothing to do with invidious discrimination. When confronted with a complaint alleging discrimination, in addition to the above considerations, “economic feasibility” is properly informed by factors such as: (1) whether a grant-making entity (say, in the BEAD context) delineates the deployment areas that are being subsidized; (2) whether the area subject to question is receiving, or is slated to receive, federal or state subsidized build-outs; (3) whether another provider is already providing service, or is slated to offer service, at comparable speeds and with comparable quality of service metrics; (4) regulatory or procedural requirements that increase costs prohibitively; and (5) whether the provider does not provide service in the complainant’s area using the technology the complainant prefers. As explained in FSF’s comments and reply comments, when broadband providers make deployment decisions based on economic feasibility reasons such as those above, the Act forbids the Commission from treating those decisions as wrongful.

PRESS RELEASE: The FCC's Proposal to Impose Public Utility Regulation on Internet Providers Is Deeply Flawed

 

In response to the FCC’s adoption of a notice of proposed rulemaking to reclassify Internet service providers as common carriers, Free State Foundation President Randolph May issued the following statement:

“Despite the over-the-top scare tactics and doom-and-gloom predictions employed by Chairwoman Rosenworcel and net neutrality proponents throughout 2017 in opposing the Restoring Internet Freedom Order, the FCC’s own rulemaking notice doesn’t purport to claim there is any present evidence of consumer harm to justify imposing a costly intrusive public utility regime on Internet service providers. Instead, the proposal concededly is based on conjecture about what ‘could' or ‘might' occur at some time in the future. For this reason alone, today’s proposed agency action will go down in history as one of the most egregious overreaches in regulatory history. Rather than “net neutrality,” the proposed strict government control of Internet providers by the imposition of public utility regulation might more properly be called “net neutering." 

Chairman Rosenworcel claims that public utility regulation is justified because the Internet is now 'essential' like water and electricity, and providers of those services are most often public utilities. This claim is misguided because, unlike water and power companies, Internet service providers operate in a facilities-based competitive marketplace, and one that is steadily growing increasingly competitive. Regardless of whether Internet service should be characterized as ‘essential’ for some purpose or another, in light of the competitive conditions in which Internet providers operate, likening them to water and electric utilities is especially inapt. Food and clothing are 'essential' too, but no one suggests they should be subjected to public utility regulation. If they were, there almost certainly would be less food and clothing available because, as most economists acknowledge, public utility regimes almost always, over time, suppress investment and innovation. This is because of the regulatory costs imposed and uncertainties created regarding regulators’ decisions.

As but one example in this instance of such inevitable regulatory uncertainties that necessarily disincentivize investment and innovation, the FCC is proposing to adopt what it calls a 'general conduct standard.' But the conduct standard is inherently ambiguous and subject to abuse, based as it is on ad hoc determinations of ‘reasonableness’ and 'totality of the circumstances' evaluations.  

Rather than proposing regulatory solutions for non-existent problems, at a time when Congress has appropriated over $100 billion to promote ubiquitous broadband deployment, especially to unserved areas, and to support adoption, it would make far more sense for the FCC and the Biden Administration to devote their full attention and resources to implementing these programs in an efficient and cost-effective manner, with as little fraud and abuse as possible.

On top of the reasons why, as a matter of policy, the FCC’s proposal is so seriously flawed, as I have explained elsewhere, it is very unlikely to survive judicial review because Congress has not clearly authorized the Commission to take an action of such major economic and political significance. Indeed, Congress has rejected several attempts to amend the Communications Act to provide the FCC with such authority.”

Please direct any press inquiries to Mr. May at info@freestatefoundation.org

Recent Free State Foundation Resources Regarding Net Neutrality:

Seth L. Cooper, Net Neutrality Regulation Is Not a Public Safety Measure, October 17, 2023

 

Randolph J. May, Net Neutrality Redux: A Fight Over First Principles, October 16, 2023

 

Seth L. Cooper, FCC Ambiguous 'General Conduct' Standard Is Bad Policy and Likely Unlawful, October 13, 2023

Randolph J. May, There’s Little Question Net Neutrality Is a Major Question, September 28, 2023

 

Randolph J. May, Reimposing Burdensome Net Neutrality Mandates Will Harm Consumers, September 21, 2023

 

Randolph J. May, Don’t Regulate Internet Providers as Public Utilities – Again!, July 6, 2023 

 

USTelecom Report Shows Price Drops and Speed Increases for Broadband Services

On October 11, USTelecom released its "2023 Broadband Pricing Index." This latest edition of the BPI report found that prices for fixed wireline broadband services – DSL, cable, and fiber-to-the-home – declined between March 2022 and March 2023. According to the BPI Report, inflation-adjusted prices for providers' most popular broadband speed tier decreased by 18.1% and prices for their fastest speed tier option went down 6.5%. Additionally, between 2015 and 2023, inflation-adjusted prices for the most popular speed tier declined 54.7% and prices for the highest speed tier option dropped by 55.8%. 

Also, the BPI Report found that, between 2015 and 2023, "download speeds offered in the most popular tier increased by 141.5%, while upload speeds increased by nearly 285%" and that "[i]n the fastest-offered tier, download speeds increased by 117.1%, with upload speeds up by nearly 90%."

 

The BPI Report also shows Consumer Price Index (CPI) trends for broadband Internet services compared to other goods and services. Between 2015 and 2023, costs for consumer goods and services rose by 28%, according to CPI-U, but consumer prices for the most popular and the fastest speed options went down by 37% and 39%, respectively. 

 

The report relies on the FCC's Urban Rate Survey of the largest 14 wireline broadband providers that collectively serve 90% of all terrestrial fixed broadband services sold in the U.S. The 2023 BPI Report is available on USTelecom's website. FSF Senior Fellow Andrew Long wrote about the 2022 BPI Report in a June 2022 blog post and about the 2021 BPI Report in a May 2021 blog post. 

 

The findings of the BPI Report are particularly significant now that the FCC has opened its Safeguarding and Securing the Open Internet proceeding and proposed to subject broadband Internet access services to public utility regulation. The continuing improvements in network speeds and the consumer-friendly pricing trends on broadband service plans are strong indicators that the broadband marketplace is competitive. Certainly, these market developments do not justify imposing stringent new regulation on broadband services. The Commission should not impose public utility regulation on broadband networks but maintain its market-oriented framework that has helped promote the private investment in competitive wireline broadband networks. For more on this point, see Free State Foundation President Randolph May's September 21, 2023, Perspectives from FSF Scholars, "Reimposing Burdensome Net Neutrality Mandates Will Harm Consumers."

Over 40 Republican Senators Tell FCC to Say No to Net Neutrality

In a letter that was released earlier today, Senators John Thune (R-SD), ranking member of the Commerce Committee's Subcommittee on Communications, Media, and Broadband, and Ted Cruz (R-TX), ranking member of the Commerce Committee, called FCC Chairwoman Jessica Rosenthal's proposal to subject broadband Internet access services to public utility regulation under Title II of the Communications Act a "historic mistake."

More than forty GOP Senators, including the entire Senate Republican leadership team, added their names to the letter.

In the letter, the Senators warn that "[r]e-imposing heavy-handed, public-utility regulations would threaten the progress our country has made since 2017, and it would steer our country out of the fast lane and into a world of less competition, less choice, less investment, slower speeds, and higher prices."

They also emphasize that, because "the FCC lacks this statutory authority over broadband internet access," any attempt to reclassify broadband under Title II "will not survive judicial review."

In a September 26, 2023, press release posted to the FSF Blog, Free State Foundation President Randolph May characterized Chairwoman Rosenworcel's proposal as "foolhardy," made similar predictions regarding its ability to survive application of the "major questions doctrine," and cautioned that, despite claims to the contrary, it inevitably would result in rate regulation.

A Reader on Net Neutrality and Restoring Internet Freedom: A Relevant Book for 2023

On September 28, the FCC released a draft proposed notice of rulemaking that would reclassify broadband Internet services as a "telecommunications service" under Title II of the Communications Act and reimpose every or near every aspect of the repealed 2015 Title II Order. At its upcoming October 19 public meeting, the full Commission will vote on whether to approve the draft and issue the proposed rulemaking for public comment. Free State Foundation President Randolph May offered his initial reaction to the anticipated release of the draft in a September 26 press release.  

In 2017, the Free State Foundation filed initial comments and reply comments in the Restoring Internet Freedom proceeding that led to the Commission's repeal of the Title II Order and return to broadband Internet access services as an "information service" under Title I of the Communications Act. (Additionally, FSF filed comments in April 2020 in the Restoring Internet Freedom Order remand proceeding.)

 

The draft proposed rulemaking in the new Safeguarding and Securing the Open Internet proceeding amounts to an effectively wholesale return to the Title II Order, premised largely upon the same premises upon which the Title II Order was adopted. The draft presents the same issues of serious concerns regarding rate regulation, vague general conduct standard, harm to innovation in paid prioritization agreements that could benefit consumers, and more that several Free State Foundation scholars addressed in the FSF Press's 2018 book A Reader on Net Neutrality and Restoring Internet Freedom, edited and with an introduction by FSF President Randolph May and I. The chapters in that book – which defend the market-oriented light-touch regulatory approach to broadband under the RIF Order and identify problems with public utility regulation of broadband Internet services under the Title II Order – remain extremely relevant in 2023. 

Copies of A Reader on Net Neutrality and Restoring Internet Freedom are still available for purchase at outlets such as Amazon and Barnes & Noble. The book is recommended reading for anyone who wants a refresher on the policy debate over net neutrality regulation or who are new to the debate and want to be brought up to speed.

Expect FSF scholars to say more in the days ahead about the Safeguarding and Securing the Open Internet proceeding and FCC Chairwoman Jessica Rosenworcel's draft proposal to reimpose public utility regulation on broadband services. 

Supreme Court Declines to Hear Case on Direct Copyright Infringement

On October 2, the Supreme Court denied certiorari in ABKCO Music, Inc. v. Sagan (2022). I wrote about this case in my September 20 Perspectives from FSF Scholars, "Supreme Court Should Clarify the Law on Direct Infringement of Copyrighted Works." By declining to grant review of the case, the court unfortunately passed up the opportunity to set the law straight that a defendant that orders and participates in an infringement can be liable for direct infringement even if the defendant did not personally perform the literal act of copying the copyrighted work. 

As explained in my Perspectives paper, the Second Circuit went off course in Sagan by improperly applying the "volitional conduct" requirement for direct infringement liability. The lower court wrote that "direct liability attaches only to 'the person who actually presses the button.'" But that is at odds with a copyright owner's "exclusive rights to do and to authorize" under Section 106 of the Copyright Act. As the Supreme Court observed, in Sony Corp. of America v. Universal City Studios, Inc. (1984), "an infringer is not merely one who uses a work without authorization by the copyright owner, but also one who authorizes the use of a copyrighted work without actual authority from the copyright owner."

 

By refusing to hear the case, the court lets stand the Sixth Circuit's decision that unduly narrows the traditional understanding direct infringement and that conflicts with decisions in at least other circuits. For instance, in Society of the Holy Transfiguration Monastery, Inc. v. Gregory (2012), the First Circuit emphasized that an infringer includes "one who authorizes the use of the copyright work without actual authority from the copyright owner" – quoting Sony. And in Lewis Galoob Toys, Inc. v. Nintendo of America, Inc. (1992), the Ninth Circuit recognized that "infringement by authorization is a form of direct infringement."

 

For now, it is to be hoped that other lower courts will decline to follow the Sixth Circuit's misapplication of the volitional conduct requirement and unduly narrow definition of direct infringement that undermines the ability of copyright owners to enforce their exclusive rights.