Transcripts For CSPAN2 Telecommunications Policy Conference

Enforcement actions, antitrust laws and online Data Security. Posted by the Free State Foundation this is about one hour. We are going right into the next panel which is the view from the ftc, overseeing internet practices in the digital age. The panel looks to be incisive from a policy perspective and keeping in mind are cspan audience, we promise a Panel Discussion that is tv and familyfriendly as always. You have biographies with you that are printed. The brochure is also at our website restate foundation. Org. In the interest of time i will keep the bios, introductions short and seated here with me at the podium here i have tad lipsky, acting director of the bureau of competition at the federal trade commission. The bureau of competition addresses matters such as mergers and premerger clearance as well as anticompetitive practices. He is a recognized expert in the field of antitrust and competition law and policy. With an extensive background as well in private practice and historic service at the antitrust division of the department of justice. I also have here on the panel tom pahl, acting director of the bureau of Consumer Protection at the federal trade commission. The bureau of Consumer Protection false matters such as advertising and marketing practices, privacy as well as enforcement action. And then finally we also have with us today daniel lyons who is associate professor of law at Boston College law school where he specializes in matters such as property, telecommunications and Administrative Law. Professor lyons is also a member of Free State Foundation board of academic advisors. So as we proceed along we will have our distinguished ftc officials speak each for about teten or 12 minutes. After that time professor lyons will be offering some responsive comments or any other lifechanging insights that you want to impart to us today. So i will begin by turning things over to tad lipsky, who is acting director of the bureau of competition at the ftc. Thanks very much, and thanks to the fsf for this opportunity to speak. I should probably begin by saying that my colleague tom pahl is really the start of this show for writing a very simple reasons. The ftc is by far the most experienced an Expert Agency anywhere on the planet in terms of Consumer Protection, which is toms responsibility. Thanks for the blog. The bureau of competition for the federal trade Commission Even though we are very considerable authority and also regard ourselves as great experts, we have a truly unbelievable recent won loss record in the antitrust litigation and we are a fearsome fighting machine, but we share antitrust responsibility with a number of other institutions in the american legal system. Of course antitrust division of the department of justice would be the first identify in that respect. We have concrete jurisdiction in most respects in terms of our antitrust jurisdiction, and, of course, the antitrust division also enforces laws against exclusionary monopoly conduct, cartels. We share merger review responsibility with the division as well. But such was the affection of of the Benjamin Harrison administration for antitrust remedies. We also have what is called the private right of action also referred to as the private attorney general provision of the antitrust laws. Anyone injured in his business or property is entitled to bring a lawsuit in a Federal District court in the United States to recover damages for any injuries suffered on account of an antitrust violation, which are automatically troubled and the plaintiff also gets his attorneys fees paid by the losing defendant. If the plaintiff loses, he doesnt have to pay the defendants attorneys. So its kind of a oneweek fee shifting provision but is always acted as a very significant subsidy for antitrust litigation in the United States and it is therefore no accident that the section antitrust laws Spring Meeting is invariably attended by thousands of antitrust lawyers from all over the United States, and this i this is a mot is been repeated around the world. Antitrust litigation is one of the most prolific species of litigation in the federal courts, and theres also antitrust litigation on behalf of states attorney general under what we call the baby sherman acts and the baby ftc acts, so state laws that are analogous to the federal laws. So its made america commerce kind of a free fire zone for antitrust litigation. And i havent even mentioned class action procedures and a number of other broader features of the civil litigation picture in the United States that also make it very easy for an injured party to bring an antitrust lawsuit. This would include notice pleading, extensive pretrial discovery and on and on, and thats why as i say, used to say to my younger colleagues looking to join a law firm, i would say if you are successful as, and antitrust defense bar, you can look forward to a pretty good life. But you always fly commercial. If you want to own your own gulfstream, you want to be on the side of the plaintiffs bar. So antitrust, the reason im going to all of these tremendous features of u. S. Legal system that make it so easy for the antitrust laws to be enforced is that this is what awaits those who would engage in anticompetitive contract as an isp or Telecommunications Carrier out beyond whatever security is provided by a regulatory breakwater. We do have some doctrines that protect regulated parties from antitrust suits, but the burden for establishing those communities is rather severe. If you dont have an explicit antitrust immunity under statute, and i think that our little or no areas for explicit antitrust immunity under the federal Communications Act, you have to find a plane repugnancy between the regulatory system and the antitrust laws before any of these other implied immunities can be invoked. So the antitrust is a powerful system. It is used to condemning and bringing very severe remedies to bear on those who engage in anticompetitive activities. So to the extent this debate about how to treat the net to make it neutral or whatever, are based on the idea that a lessening of the Regulatory Burden on the fcc side would lead to a situation in which anticompetitive conduct was free to occur without fear of further consequences. That is i think demonstrably unrealistic. The ftc is waiting. We recently brought a case for anticompetitive exclusionary conduct, a case called mcwane, the department of justice has brought cases for exclusionary conduct thinking of the dense supply case, and, of course, the dense supply case was followed on my extensive private litigation. So thats why there a lot of antitrust lawyers. Thats why most Significant Companies are very careful to have actively administered programs of compliance policy for antitrust law and why i think the public need have no fear that anticompetitive practices occurring in the free market of Internet Services are going to be detected and punished. So that is in a sense thats kind of the wheel, in my wheelhouse. What does antitrust enforcement have to do with the provision of Internet Services and the things that are under consideration now at the fcc. Now im going to get slightly editorial. Of course in everything i said im not speaking for the commission. Im speaking for myself. But this is, you need to keep that a special in mind for the next comment, which is i was very interested by the remarks of chief Justice Cohen on the Morning Panel who absorbed, he didnt understand why we would even be seriously discussing the application to an industry as dynamic and growing and technologically complex and shifting as Internet Services. Why should we even be considering applying a form of regulation that goes back to the 1930s . Well, i didnt think that he was intending that remark as a complement to title ii regulation, but to put the origins of title ii regulation back in the 1930s is in a sense a bit of flattery. This form of regulation was actually modeled on the first economic regulations that were entrusted to an Administrative Agency. This is going back to Grover Cleveland. And not, not the modern state of the art Grover Cleveland of his second term after the Benjamin Harrison term. This was his first term, during which this Regulatory Authority was given to the interstate Commerce Commission, the first economic regulatory Administrative Agency in the u. S. And it is a fact that the fcc title ii regulation is a direct descendent of that form of regulation. The interstate commerce act and the interstate Commerce Commission has been the model for all of the economic regulatory agencies at the federal level in our history. The Civil Aviation authority which became the Civil Aeronautics Board, the u. S. Shipping commission which became the federal maritime commission, the federal Power Commission which became the federal Energy Rating for commission, and the fcc which actually if you draw the line back from title ii regulation you ultimately get back to i believe it was the interstate Commerce Commission itself which was the original repository of the first regulations of the electromagnetic spectrum that were enacted in the 1920s in the u. S. So i am a cheerleader for the slight regulation approach, and i endorse the philosophy that the temptation to look at the problems of a dynamic and quickly developing industry and immediately apply this structure economic regulation a as a way f anticipating and making sure that future problems dont arise has largely been a fail. The interstate Commerce Commission no longer exists. It was eliminated in 1996, and the Civil Aeronautics Board no longer exists. I believe it was eliminated about ten years earlier. It is in many respects a dubious and highly questionable and in Many Industries a failed system of regulation. So i am a light touch regulator. Im a fan of antitrust as the way of ensuring that dynamic free competition gives the consumer what he wants and in that endeavor we also need Consumer Protection and some go to turn the mics over to tom. Good afternoon everyone. Thank you for asking me to come here today and discussed the ftcs future Consumer Protection role with regard to online Data Security and privacy. Before i begin, i had to give a disclaimer that the views i expressed are my own and didnt necessarily represent the views of the commission for the individual commissioner. One generation of the internet has transformed our lives. When i was a kid i used use encyclopedias to look up information and use a paper map to find my way. I shared a landline with my parents. I could only talk to one friend at a time on the telephone. My parents used travel agents to Book Vacation plans, endure terminable weights to be on hold to buy concert tickets, and hire people to perform homeimprovement tasks that we did know how to perform ourselves. Today my teenage son, cannot even imagine living under those kinds of circumstances. He can look up historical trivia, Current Events and song lyrics at the touch of a button anywhere and at any time. Through group chats and social media he can to make it with dozens of friends at the same time. He can buy book concert tickets through stub hub and find discounts on groupon. Take a look at youtube videos to learn how to mow the lawn, group dinner or fix asymptote of being a teenager doesnt do any of those household chores, but the knowhow is out there online if you were so inclined. In the 2010s technology has moved even fast with the rise of the internet of things. Almost any product you can imagine these being made right now as connected or smart version, from refrigerators to carson Home Security systems, Baby Monitors and even light bulbs and pillows and clothing. Yes smart clothing. Just last month amazon announced a new echo look, a handsfree voice controlled camera that records your looks from every angle and then gives you fashion advice. Im not sure whether thats a a good thing or not the Technological Development but it is out there for those of you who really would like some thoughts on your fashion. In any event these internet developments have transformed and will continue to transform our lives. In large part a free Market Limited regulatory approach has fostered this transformational protecting consumers from harm. My boss acting fcc chairman described her approach to governing as regulatory humility, and that is what were trying to intimate at the federal trade commission. What this means is we must recognize the inherent limitations of our own knowledge and ability to predict the future in addressing Public Policy issues. These limits counsel abdication, not abdication by prudence when it comes to these in governmental power. Let me discuss wha why i think e fcc outline such an approach to online Data Security and privacy would serve consumers very well. It helps to start by going back to the future, specifically turning the clock back to 2014. The ftc ftc was a federal governments leading privacy and Data Security agency. They would act of law enforcer bring in more than 500 privacy and Data Security related cases prior to that time. We challenge those of on at the prohibition on unfair and deceptive acts and practices under the ftc act. We challenged those of violated other laws that specifically address privacy or Data Security, such as the childrens Online Security protection act, fair credit reporting act and the grammleachbliley act. The ftcs privacy and Data Security cases involve offline and online information in Companies Large and small. They covered all parts of the internet ecosystem including social networks, search engines, ad networks, online retailers, mobile apps, and mobile handsets. In just thousand nine, for example, the ftc said that a rogue isp, well let you know he recruited composted and participate in the distribution of spam, child pornography and other harmful content 2009. We investigated the rise of issues related to the security of its routers. The ftc supplemented its enforcement activity in business guidance, Consumer Education and policy research and development. For example, in 2014 the ftc hosted a threepart spring privacy series examining the present security applications of new technologies involving mobile device tracking, alternative scoring products and connected health and fitness devices. The ftc staff hosted a workshop on issues such as big data in 2014, the internet of things in 2013, and mobile security in 2013 as well. Commission staff throughout this period of time release countless consumer and business educational materials to provide tips for consumers and businesses on how to avoid potential privacy and Data Security arms. In 2015, the ftcs role changed somewhat. The fcc issued its open Internet Order to classify Broadband Service as a common Carrier Service in the Communications Act of 1934. Under the longtime use of both the ftc and fcc, including articulated in a brief i believe assad yesterday in a case in the ninth circuit, the ftc and the sec have always viewed the ftcs lacking jurisdiction under the ftc act with regard to the common carrier activities of common carriers. The fcc open Internet Order effectively prevented the ftc for engaging in enforcement, rulemaking and other Consumer Protection activities concerning isps, online Data Security and privacy. In 2016 as many of you know the fcc followed its open Internet Order with issues of rules restricting and limiting isp Data Security and privacy practices. In doing so the fcc chose a more rigid and prescriptive approach to broadband Data Security and privacy issues than the ftcs traditional casebycase approach to these topics. The ftcs rules also set Data Security<\/a>. Posted by the Free State Foundation<\/a> this is about one hour. We are going right into the next panel which is the view from the ftc, overseeing internet practices in the digital age. The panel looks to be incisive from a policy perspective and keeping in mind are cspan audience, we promise a Panel Discussion<\/a> that is tv and familyfriendly as always. You have biographies with you that are printed. The brochure is also at our website restate foundation. Org. In the interest of time i will keep the bios, introductions short and seated here with me at the podium here i have tad lipsky, acting director of the bureau of competition at the federal trade commission. The bureau of competition addresses matters such as mergers and premerger clearance as well as anticompetitive practices. He is a recognized expert in the field of antitrust and competition law and policy. With an extensive background as well in private practice and historic service at the antitrust division of the department of justice. I also have here on the panel tom pahl, acting director of the bureau of Consumer Protection<\/a> at the federal trade commission. The bureau of Consumer Protection<\/a> false matters such as advertising and marketing practices, privacy as well as enforcement action. And then finally we also have with us today daniel lyons who is associate professor of law at Boston College<\/a> law school where he specializes in matters such as property, telecommunications and Administrative Law<\/a>. Professor lyons is also a member of Free State Foundation<\/a> board of academic advisors. So as we proceed along we will have our distinguished ftc officials speak each for about teten or 12 minutes. After that time professor lyons will be offering some responsive comments or any other lifechanging insights that you want to impart to us today. So i will begin by turning things over to tad lipsky, who is acting director of the bureau of competition at the ftc. Thanks very much, and thanks to the fsf for this opportunity to speak. I should probably begin by saying that my colleague tom pahl is really the start of this show for writing a very simple reasons. The ftc is by far the most experienced an Expert Agency<\/a> anywhere on the planet in terms of Consumer Protection<\/a>, which is toms responsibility. Thanks for the blog. The bureau of competition for the federal trade Commission Even<\/a> though we are very considerable authority and also regard ourselves as great experts, we have a truly unbelievable recent won loss record in the antitrust litigation and we are a fearsome fighting machine, but we share antitrust responsibility with a number of other institutions in the american legal system. Of course antitrust division of the department of justice would be the first identify in that respect. We have concrete jurisdiction in most respects in terms of our antitrust jurisdiction, and, of course, the antitrust division also enforces laws against exclusionary monopoly conduct, cartels. We share merger review responsibility with the division as well. But such was the affection of of the Benjamin Harrison<\/a> administration for antitrust remedies. We also have what is called the private right of action also referred to as the private attorney general provision of the antitrust laws. Anyone injured in his business or property is entitled to bring a lawsuit in a Federal District<\/a> court in the United States<\/a> to recover damages for any injuries suffered on account of an antitrust violation, which are automatically troubled and the plaintiff also gets his attorneys fees paid by the losing defendant. If the plaintiff loses, he doesnt have to pay the defendants attorneys. So its kind of a oneweek fee shifting provision but is always acted as a very significant subsidy for antitrust litigation in the United States<\/a> and it is therefore no accident that the section antitrust laws Spring Meeting<\/a> is invariably attended by thousands of antitrust lawyers from all over the United States<\/a>, and this i this is a mot is been repeated around the world. Antitrust litigation is one of the most prolific species of litigation in the federal courts, and theres also antitrust litigation on behalf of states attorney general under what we call the baby sherman acts and the baby ftc acts, so state laws that are analogous to the federal laws. So its made america commerce kind of a free fire zone for antitrust litigation. And i havent even mentioned class action procedures and a number of other broader features of the civil litigation picture in the United States<\/a> that also make it very easy for an injured party to bring an antitrust lawsuit. This would include notice pleading, extensive pretrial discovery and on and on, and thats why as i say, used to say to my younger colleagues looking to join a law firm, i would say if you are successful as, and antitrust defense bar, you can look forward to a pretty good life. But you always fly commercial. If you want to own your own gulfstream, you want to be on the side of the plaintiffs bar. So antitrust, the reason im going to all of these tremendous features of u. S. Legal system that make it so easy for the antitrust laws to be enforced is that this is what awaits those who would engage in anticompetitive contract as an isp or Telecommunications Carrier<\/a> out beyond whatever security is provided by a regulatory breakwater. We do have some doctrines that protect regulated parties from antitrust suits, but the burden for establishing those communities is rather severe. If you dont have an explicit antitrust immunity under statute, and i think that our little or no areas for explicit antitrust immunity under the federal Communications Act<\/a>, you have to find a plane repugnancy between the regulatory system and the antitrust laws before any of these other implied immunities can be invoked. So the antitrust is a powerful system. It is used to condemning and bringing very severe remedies to bear on those who engage in anticompetitive activities. So to the extent this debate about how to treat the net to make it neutral or whatever, are based on the idea that a lessening of the Regulatory Burden<\/a> on the fcc side would lead to a situation in which anticompetitive conduct was free to occur without fear of further consequences. That is i think demonstrably unrealistic. The ftc is waiting. We recently brought a case for anticompetitive exclusionary conduct, a case called mcwane, the department of justice has brought cases for exclusionary conduct thinking of the dense supply case, and, of course, the dense supply case was followed on my extensive private litigation. So thats why there a lot of antitrust lawyers. Thats why most Significant Companies<\/a> are very careful to have actively administered programs of compliance policy for antitrust law and why i think the public need have no fear that anticompetitive practices occurring in the free market of Internet Services<\/a> are going to be detected and punished. So that is in a sense thats kind of the wheel, in my wheelhouse. What does antitrust enforcement have to do with the provision of Internet Services<\/a> and the things that are under consideration now at the fcc. Now im going to get slightly editorial. Of course in everything i said im not speaking for the commission. Im speaking for myself. But this is, you need to keep that a special in mind for the next comment, which is i was very interested by the remarks of chief Justice Cohen<\/a> on the Morning Panel<\/a> who absorbed, he didnt understand why we would even be seriously discussing the application to an industry as dynamic and growing and technologically complex and shifting as Internet Services<\/a>. Why should we even be considering applying a form of regulation that goes back to the 1930s . Well, i didnt think that he was intending that remark as a complement to title ii regulation, but to put the origins of title ii regulation back in the 1930s is in a sense a bit of flattery. This form of regulation was actually modeled on the first economic regulations that were entrusted to an Administrative Agency<\/a>. This is going back to Grover Cleveland<\/a>. And not, not the modern state of the art Grover Cleveland<\/a> of his second term after the Benjamin Harrison<\/a> term. This was his first term, during which this Regulatory Authority<\/a> was given to the interstate Commerce Commission<\/a>, the first economic regulatory Administrative Agency<\/a> in the u. S. And it is a fact that the fcc title ii regulation is a direct descendent of that form of regulation. The interstate commerce act and the interstate Commerce Commission<\/a> has been the model for all of the economic regulatory agencies at the federal level in our history. The Civil Aviation<\/a> authority which became the Civil Aeronautics Board<\/a>, the u. S. Shipping commission which became the federal maritime commission, the federal Power Commission<\/a> which became the federal Energy Rating<\/a> for commission, and the fcc which actually if you draw the line back from title ii regulation you ultimately get back to i believe it was the interstate Commerce Commission<\/a> itself which was the original repository of the first regulations of the electromagnetic spectrum that were enacted in the 1920s in the u. S. So i am a cheerleader for the slight regulation approach, and i endorse the philosophy that the temptation to look at the problems of a dynamic and quickly developing industry and immediately apply this structure economic regulation a as a way f anticipating and making sure that future problems dont arise has largely been a fail. The interstate Commerce Commission<\/a> no longer exists. It was eliminated in 1996, and the Civil Aeronautics Board<\/a> no longer exists. I believe it was eliminated about ten years earlier. It is in many respects a dubious and highly questionable and in Many Industries<\/a> a failed system of regulation. So i am a light touch regulator. Im a fan of antitrust as the way of ensuring that dynamic free competition gives the consumer what he wants and in that endeavor we also need Consumer Protection<\/a> and some go to turn the mics over to tom. Good afternoon everyone. Thank you for asking me to come here today and discussed the ftcs future Consumer Protection<\/a> role with regard to online Data Security<\/a> and privacy. Before i begin, i had to give a disclaimer that the views i expressed are my own and didnt necessarily represent the views of the commission for the individual commissioner. One generation of the internet has transformed our lives. When i was a kid i used use encyclopedias to look up information and use a paper map to find my way. I shared a landline with my parents. I could only talk to one friend at a time on the telephone. My parents used travel agents to Book Vacation<\/a> plans, endure terminable weights to be on hold to buy concert tickets, and hire people to perform homeimprovement tasks that we did know how to perform ourselves. Today my teenage son, cannot even imagine living under those kinds of circumstances. He can look up historical trivia, Current Events<\/a> and song lyrics at the touch of a button anywhere and at any time. Through group chats and social media he can to make it with dozens of friends at the same time. He can buy book concert tickets through stub hub and find discounts on groupon. Take a look at youtube videos to learn how to mow the lawn, group dinner or fix asymptote of being a teenager doesnt do any of those household chores, but the knowhow is out there online if you were so inclined. In the 2010s technology has moved even fast with the rise of the internet of things. Almost any product you can imagine these being made right now as connected or smart version, from refrigerators to carson Home Security<\/a> systems, Baby Monitors<\/a> and even light bulbs and pillows and clothing. Yes smart clothing. Just last month amazon announced a new echo look, a handsfree voice controlled camera that records your looks from every angle and then gives you fashion advice. Im not sure whether thats a a good thing or not the Technological Development<\/a> but it is out there for those of you who really would like some thoughts on your fashion. In any event these internet developments have transformed and will continue to transform our lives. In large part a free Market Limited<\/a> regulatory approach has fostered this transformational protecting consumers from harm. My boss acting fcc chairman described her approach to governing as regulatory humility, and that is what were trying to intimate at the federal trade commission. What this means is we must recognize the inherent limitations of our own knowledge and ability to predict the future in addressing Public Policy<\/a> issues. These limits counsel abdication, not abdication by prudence when it comes to these in governmental power. Let me discuss wha why i think e fcc outline such an approach to online Data Security<\/a> and privacy would serve consumers very well. It helps to start by going back to the future, specifically turning the clock back to 2014. The ftc ftc was a federal governments leading privacy and Data Security<\/a> agency. They would act of law enforcer bring in more than 500 privacy and Data Security<\/a> related cases prior to that time. We challenge those of on at the prohibition on unfair and deceptive acts and practices under the ftc act. We challenged those of violated other laws that specifically address privacy or Data Security<\/a>, such as the childrens Online Security<\/a> protection act, fair credit reporting act and the grammleachbliley act. The ftcs privacy and Data Security<\/a> cases involve offline and online information in Companies Large<\/a> and small. They covered all parts of the internet ecosystem including social networks, search engines, ad networks, online retailers, mobile apps, and mobile handsets. In just thousand nine, for example, the ftc said that a rogue isp, well let you know he recruited composted and participate in the distribution of spam, child pornography and other harmful content 2009. We investigated the rise of issues related to the security of its routers. The ftc supplemented its enforcement activity in business guidance, Consumer Education<\/a> and policy research and development. For example, in 2014 the ftc hosted a threepart spring privacy series examining the present security applications of new technologies involving mobile device tracking, alternative scoring products and connected health and fitness devices. The ftc staff hosted a workshop on issues such as big data in 2014, the internet of things in 2013, and mobile security in 2013 as well. Commission staff throughout this period of time release countless consumer and business educational materials to provide tips for consumers and businesses on how to avoid potential privacy and Data Security<\/a> arms. In 2015, the ftcs role changed somewhat. The fcc issued its open Internet Order<\/a> to classify Broadband Service<\/a> as a common Carrier Service<\/a> in the Communications Act<\/a> of 1934. Under the longtime use of both the ftc and fcc, including articulated in a brief i believe assad yesterday in a case in the ninth circuit, the ftc and the sec have always viewed the ftcs lacking jurisdiction under the ftc act with regard to the common carrier activities of common carriers. The fcc open Internet Order<\/a> effectively prevented the ftc for engaging in enforcement, rulemaking and other Consumer Protection<\/a> activities concerning isps, online Data Security<\/a> and privacy. In 2016 as many of you know the fcc followed its open Internet Order<\/a> with issues of rules restricting and limiting isp Data Security<\/a> and privacy practices. In doing so the fcc chose a more rigid and prescriptive approach to broadband Data Security<\/a> and privacy issues than the ftcs traditional casebycase approach to these topics. The ftcs rules also set Data Security<\/a> and privacy standards for broadband providers separate and apart from the standards applicable to others in the online space. Eschewing the fccs more holistic and comprehensive approach. Under leadership of chairman pai the fcc has recently gone to take it to attack. I think of you know in march the fcc state its privacy and Data Security<\/a> broadband rules at which congress used the Congressional Review Act<\/a> to invalidate them and preclude the fcc from adopting substantially similar roles in the future. Earlier this month the fcc issued a notice of proposed rulemaking under which it proposes to no longer classify Broadband Service<\/a> as a common Carrier Service<\/a>. As we for today and im sure all of you know this proceeding is ongoing. If the fcc were to make its proposed change final, the ftc likely would then be able to use its enforcement were making another activities to once again address broadband Data Security<\/a> and privacy. Id like to talk about what that would look like if that were to come to pass. The ftc is ready, willing and able to protect the Data Security<\/a> and privacy of broadband subscribers. The ftc continues to be the federal governments leading agency on Data Security<\/a> and privacy issues. We have a wealth of Consumer Protection<\/a> and competition experience and expertise which will bring to bear on online Data Security<\/a> and privacy laws. We would apply Data Security<\/a> and privacy standards to all companies that compete in the online space, regardless of whether the companies provide Broadband Service<\/a>s, data analytics, social media or other services. Our approach would ensure the standards the government applies our comprehensive, consistent and procompetitive. At the heart of the fccs approach to online Data Security<\/a> and privacy is tough but measured law enforcement. Focus mainly on combating unfair and deceptive acts or practices in violation of the ftc act. We hold companies responsible for the privacy promises they make to consumers. We hold Companies Accountable<\/a> for the misuse of sensitive information. We hold companies responsible for not having reasonable Data Security<\/a> practices. As the listed by our track record, we as effective casebycase enforcement to protect consumers, including those online. Some have argued it would be better for the government to address online Data Security<\/a> and privacy to regulation rather than preceding casebycase. Rulemaking imposes standards based on the prediction that they will be necessary and appropriate to address future conduct. Casebycase enforcement by contrast involves no such protection because the challenges and remedies conduct has already occurred. Of course such enforcement also is a prophylactic effect, as Companies Look<\/a> at past enforcement for the condit. The internet as a vault in ways we could not have predicted and is likely to continue to do so. Given the challenges of making predictions about the internets future, we need casebycase enforcement which a strong yet flexible like steel guardrails. We do not need prescriptive regulation which would be an iron cage. Some of the advocates of regular online Data Security<\/a> and privacy emphasize the clarity and certainty that rules purportedly would bring. Yet i think this underestimates the guidance that companies can drive from other ftc activities. Th. The complaints and voters inc is more than 500 Data Security<\/a> and privacy related cases provide firms with critical information about what conduct is appropriate and what is not. The ftc also has a long and successful history of educating businesses about the Data Security<\/a> and privacy obligations. We continue to build on that work, particularly focusing on helping Small Businesses<\/a> get guidances to what their obligations are. We are creating a onestop shop on our website with the Data Security<\/a> and privacy materials that specifically designed for Small Businesses<\/a> to help them come into compliance with the law. In addition, the coming months we will expand our Business Outreach<\/a> and Data Security<\/a> issues with a focus on helping businesses identify risks to the companies. Given the ftcs devastator ability to inform companies with the long requires of them, theres no need to issue restrictive rules for online Data Privacy Security<\/a> to convey guidance. The call for rules to provide guidance to online Data Security<\/a> and privacy also overestimates the guidance provided by prescriptive regulation. Prescriptive regulation can provide some certainly in the short term, but in a fast changing areas like online Data Security<\/a> and privacy, regulators excuse me, regulations would need to be amended very often to remain current. Amending regulation is cumbersome and timeconsuming even more agencies can use apa notice and comment rulemaking procedures. Such financement agencies are very unlikely to keep up with the pace of change. Out of date rules can be unclear in their application to new technologies and cause confusion and unintended consequences in the marketplace. The ftc knows this approach to online Data Security<\/a> and privacy must be very forwardlooking here because the internet continues to evolve, we must evolve with it. At the ftc we have been missing our commitment to learning about new technologies, including new online technologies. We established an office of Technology Research<\/a> and investigation also known as a lowtech. Its technology is work with our investigators and prosecutors and building and bringing cases involving new technologies. They also encourage researchers to undertake projects that intersects of technology and Consumer Protection<\/a> law including many projects that involve online issues. We also have active Research Agenda<\/a> on Data Security<\/a> and privacy. Just last week we hosted a workshop on Identity Theft<\/a> will be explored new types of harms related to Identity Theft<\/a>, and we encourage stakeholders to conduct new research to help us deal with these problems. Next month were hosting a workshop for the national highway Transportation Safety<\/a> agency on connected cars when we will discuss technology, privacy and security issues. Finally over the longer term the fcc is conducting and encouraging new research into the economics of privacy. Note that this is the ftcs current Data Security<\/a> and privacy Research Agenda<\/a>. Its not carved in stone. Ou. Our agenda response to changg technology in the marketplace including the father to Online Privacy<\/a> and Data Security<\/a>. In conclusion the law, the markets and the technology relating to online Data Security<\/a> and privacy are always evolving. The ftc is ready, willing and able to act to protect consumers who are online including broadband prescribers without imposing unnecessary or undue burdens on industry. Thank you very much for having me here today, and a happy to answer any questions you may have. [applause] thank you, tad and thank you also to topic that we take a moment to recognize toms service to the ftc which a very distinguished and goes back to as early as 1990, also served as as a Consumer Financial<\/a> Protection Bureau<\/a> and has great experience in private practice of law as well. We are honored to have you here. Thank you. Now would like to turn things over to professor daniel lyons first comment in his response. Trying to be as brief as a professional law can be. Im glad youve added ftc panel. Im looking forward to the ftc playing a greater role in internet governance going for. They are doing great work already, not just in the data privacy realm which tom mentioned i think is probably the highest profile, but also something under the radar like case last year against revenge for an operator and extortioners Great Britain<\/a> the need to be shut down. The fcc with the entity that had the tools to stop them. On these and omitting other issues we see in cyberspace Law Legal Issues<\/a> are increasingly cutting across multiple Business Models<\/a> and effecting a number of different players online. I think its better general to have a regulator who can view these issues from the perspective of the entire internet ecosystem rather than a small partner. That was one of the issues we saw with the privacy debacle. With regard to neutrality in particular, i think although theres a lot of rhetoric in neutrality about speech and cause a person and issues, i think when you strip back that rhetoric, at base what Net Neutrality<\/a> is is an antitrust antiConsumer Protection<\/a> issue. The the argument goes that consumers have few choices at least among wireline providers and that the companies i in the space might use their position to shape up stream edge markets awaits it might harm consumers from competition. That sounds to me like a classic antitrust problem and the ftc is robust tools to deal with that. They know how to test remark about whether your position in the internet ecosystem is in fact, one that could raise questions. And if it does have a Legal Standard<\/a> that can evaluate these vertical foreclosures, and standards has been developed over time that recognizes some vertical foreclosure i anticonsumer and some can be proconsumer. The earlier Panel Discussed<\/a> the fact we have a consensusbuilding around a no blocking any no throttling rule and no unreasonable discoloration will. But where the rubber hits the road was on the question about paid prioritization, which can be good, can also have anticompetitive effects. The ftc is wellequipped to evaluate on a casebycase basis whether a particular agreement is one that might harm consumers. Consumers. Using robust law thats been developed from a number of Different Cases<\/a> elsewhere in the economy, and so they have a broader scope informed by a lot more history than the federal Communications Commission<\/a> can. I agree the expos for you and the flexibly that the ftc brings thats a lot better in a dynamic, regulated dynamic marketplace that more rigid fcc ex ante rulemaking. On the Consumer Protection<\/a> side, one thing that really opened my eyes recently was the way that the d. C. Circuit evaluated the fccs Net Neutrality<\/a> rules. In response to an argument from the dissent that the imposition of common carriage on isps for foreclose the isps First Amendment<\/a> right to mandatory or control. The responded and think interestingly that yes, isps have First Amendment<\/a> right of control but when they are holding themselves out to consumers as offering access to all internet into points, then the d. C. Circuits it is a carefully fcc to impose Net Neutrality<\/a> rules in order to make sure theyre fulfilling the promise they made to consumers. That sounds to me an awful lot like what the ftcs Consumer Protection<\/a> office does. Whatever you put in your terms of service, we will hold you to it and make sure you do it. Thats why section five authority has always done. Not just enforcing terms of service but promises made in advertisements and also evaluating for inherit unfair practices. Given the ftc authority to regulate unfair practices of isps sounds a lot like the general conduct standard but theres a huge difference. The difference is that the unfair conduct standard has been informed again by a number of cases that have been developed over time. The ftc has tests built into its statute as to how you determine unfairness. You look for substantial to consumers, one thats not really avoidable by consumers themselves, one that is not outweighed by some countervailing benefit to consumers or to competition. These are important distinctions from the catchall general roving conduct that the ftc has tried to give itself. Important as focuses on consumers choose the thing we seem to have lost sight of in the fcc world, and focus on them for costbenefit analysis that its not just after lunch to my debate some harm, but what the benefiting might be. The ex post review. We allow companies to experiment with different models, throw step of the console as you stick if theres actual harm will be intervene and potentially take action. My time is almost other i want to close by saying tom said were in the world of a teenager. I think thats right. The teenagers world is moving quickly. Its important isps be allowed to individuals like any other company. I think a sprint which a couple years ago and offered up the possibility of getting an unlimited talk and text and social beautiful. This would be fantastic for my daughter who blows to my dave camp every month on instagram. She doesnt do anything else online except instagram. If i can get if only gives you unlimited instagram and get her off of my shared data point that would be of benefit to me and to her. Im not always bugging her and shes not always costing me money. Unfortunately sprint felt they could introduce that differentiated Business Model<\/a> because they feared it might run afoul of the fccs Net Neutrality<\/a> rules. The ftc is better equipped to evaluate that particular Business Model<\/a> and decide is is anticompetitive or is a proconsumer and decide on a casebycase basis whether to allow the experiment to go forward, rather than to announce sweeping rules to prevent companies from wanting to experiment at all. Anka, professor lyons. Thank you. We will allow just a month or two for questions and then please instagram because mealy after that will have Closing Remarks<\/a> from professor Michelle Connolly<\/a> to close our conference. So if someone in the audience has questions, theres a microphone that is going around and you can be recognized and pose a question to our panelists. My colleague has the microphone there. Thank you. Lydia. Ive a question for the two of you. Are either of you concern the ftc is currently hamstrung with the split commission . No. [laughing] no. I mean, i think its more of a theoretical problem that a practical realworld problem. Most of the matters that come up, at least in the three months or so that ive been an acting director, the commissioners have found a way to discuss them and move forward on behalf of the agency. And so, yes, i think in theory the idea that you to commissioners who could have diametrically opposed views can keep the agency from doing some things bu but i havent seen it have that kind of the practical effect at this point. A famous antitrust scholar talks about when he was a young associate at a washington, d. C. , firm going to a hearing at the ftc in the 1960s, and he came back and said, i have a feeling that despite all of the legal firepower in the room, nobody could stay with clarity with the objective of the antitrust laws was or how or which result in a particular case would best serve the objective. That was in the 1960s. Well, that gentleman became the assistant attorney general for antitrust under Ronald Reagan<\/a> and announced that a policy Going Forward<\/a> for antitrust enforcement would be, if it doesnt make economic sense, it doesnt happen. Fortunately, that is allowed a consensus, a bipartisan consensus about antitrust enforcement to jill, consensus which remain essentially unchallenged down to the present day gel. The vast questions before the Commission Writing<\/a> to its competition jurisdiction, there is tremendous unity in the way that problems are approached. I wont say that the decisions, the recommended decision are always identical, but the consensus is the overwhelming rule even now with the split commission. Actually to expand a little bit, i agree. I think the same thing is that at the Consumer Protection<\/a> side of the aisle. A large percentage of the cases that would bring our cases involving fraud, scam artists and the like and, frankly, doesnt matter whether youre a liberal democrat or conservative republican. And so a lot of those cases Going Forward<\/a> you really dont have the kind of split she may have on a more sensitive policy issues. So there is a corpus of agreement on core Consumer Protection<\/a> principles and kind of cases that are not likely to give rise to splits, much like there is on antitrust side through some of the emphasis that tad discussed. Thank you both. Are there any other questions from the audience . We are taking questions right now here. A question for tad lipsky. The smarter and please introduce yourself. Im from the Free State Foundation<\/a>. The smarter extends for standad merger and acquisition reviews to equal rules. Whats the standard of merger reviews and should they be more standardized, with or without this legislation . The legislation is a response to a specific divergence in the way that ftc cases, merger cases, and department of justice merger cases have been handled. The department of justice has no authority whatsoever to determine that any party has violated the law. The only thing that the antitrust division can do when it believes a merger is illegal is present by case to a Federal District<\/a> court by way of complete. The Court Makes Decision<\/a> subject to appeal, of course. The federal trade commission has the same options, but they also have the authority to conduct their own administrative procedure where at Administrative Law<\/a> judge hears the case from the ftc and the parties respond, and then that makes an initial decision which is then reviewed by the federal trade commission itself. And then theres an appellate process. So it has given rise to a tremendous difference or potentially tremendous differences in the way, in the with the procedure is held, the length of the procedure and so forth but in recent years weve had this additional problem, theres been a kind of dissidents that because the precise statutory provision that sets the standard for the award of a preliminary injunction in an ftc case has kind of drifted away from the traditional equity standard that applies to the department of justice cases. The smarter act is addressed very narrowly, as i understand it, and not document in specific embodiment of the legislation, any particular bill. But the idea of the smarter act has been to narrowly target that difference so that two parties who want to engage in a transaction, they are not subject to this tremendously disparate treatment as to the injunction a standard and the procedures and the length of the proceeding that applies, depending on whether the department of justice or the ftc reviews their merger. As you know theres a century no fixed rules of which agency reviews. There is an informal clearance process, the outcome of which cannot really be predicted in any particular case. That is i think what the smarter act is all about. I is supportive of the smarter act. I dont believe that, i know that acting chairman allows an is in favor chairman old house is in favor of what i describe as a main features of the smarter act but a dont think the commission has specifically said anything about any particular bill or piece of legislation. Thank you and have concluded this panel and were going to move right into a Closing Remarks<\/a>. [applause] i want to thank my colleagu colleagues, south, for monitoring that panel and tom and tad, thank you both for being here. And i want to especially thank daniel lyons, professor lyons, for being here. Every time he participates in a Free State Foundation<\/a> program he reminds me again of why it is such a pleasure to happen. So thank you to daniel. So daniel is a member of our Academic Board<\/a> of advisors, and our next speaker, Michelle Connolly<\/a> is well and longtime member of the Free State Foundation<\/a> sport of academic advisors. Professor connolly, i should say Michelle Connolly<\/a>, is also professor at duke university. You know, im not going to say anymore about duke. I mentioned that earlier but im always, its an additional bonus to have someone from duke. Shes a professor at the practice in the Economics Department<\/a> at duke university. And i can come her full bio is in the brochure and its on our website. I guess maybe the only other thing ill point out is that she served who let off our program today as chief economist at the fcc, and i believe is the only one thats held the position that did it twice, two different times, terms, so she mustve done an awful lot right the first time around. So finally before michelle, and michelle will offer some final remarks here to conclude the conference, and the only other thing i will say is that i mentioned when commissioner pai was here, our book, communications, law and policy in the digital age, the only other plug that needs to be given about this book is that professor connolly has a chapter in it, which i hope she remembers. Its on spectrum auctions and how they should be conducted properly to best serve the public and consumers. So thats another reason why you might want to take a look at this book. With that i want to call on professor connolly for some brief remarks. I think we called this final thoughts in our brochure. Professor connolly. Thank you. So, randy first reached out to bme just as i was about to leave the fcc for the first time in the Free State Foundation<\/a> priest if i daish wishes can. I was able surprise at how ambitious he was, tha but i havo say i really underestimated his abilities to create such an Important Organization<\/a> and have such an Important Role<\/a> in current policy in d. C. I noticed the tagline would have walked in it said because i guess medicare i agree with that tremendously. Thats what i wanted to become a professor, thats why went to the grueling, well, i shouldnt say six years in grad school, but it took me that long, to become a professor, thats why ive become involved in policy gun just being in academia. I think ideas matter. I think it matters people who are somewhat outside on a personal interest in certain outcomes lend other voices to the discussion. So this is the final thoughts, or reminded me of saturday night live deep thoughts. I thought i would focus on two deep thoughts, and that will be short but i will give you a little bit of details for each one. So the first one is that the fcc is in very good hands right now. I believe that absolutely. One of the things that makes me say that is as we heard at lunch, chairman pai is talking about creating the office of Economic Data<\/a> of economics and it at the fcc. Its very important, this is a very important reversal especially from the last administration, where economists were essentially ignored most of the time, and not even spoken to. The importance of having good analysis so that policy cant be made while ignoring the actual Economic Cost<\/a>s altogether as well as any possible benefits is important. So ill get back to that. Secondly, im very happy that chairman pai is working on the redefining what the regulatory role of the fcc is. In this sense the fcc is in good hands, but my second deep thought is that unless something is fundamentally changed, unless Congress Takes<\/a> actions to support many of the things that chairman pai is doing now, this can be very shortlived. Let me go into couple of details related to this. One in terms of economic and data. Ive been studying with some students the spectrum policy, spectrum auctions since 1997. One thing we discovered is that since 1997, of all of the licenses related to Cellular Services<\/a>, half of them have been one by small bidders. Half. So this means that we have a policy which is giving bidding credits to 44 of people winning the auctions for spectrum, our scarce resource, and another 14 are being one in auctions that are set aside only for small bidders. And almost 10 have one inside auctions and using a creditor if you look at combined total that means 50 of our spectrum for Cellular Services<\/a> since 1997 have been allocated to small firms. It is not clear that this is really being imposed, the intent to help small entities and help competition is really being carried out in our current set of auction rules, if this is the outcome. In an industry with very high infrastructure costs, forcing this scarce resource into the hands of small entities simply is making a lot of economic sense. And without looking at the data, no one officially noticed this. In terms of the title ii regulation, theres a similar argument that it was justified on the grounds of last mile monopoly power. This is justified despite the fact that the title ii regulations were imposed on both fixed and mobile broadband. It was justified despite the fact that cc own data showed that as 2014, 97 of the census blocks had two or more broadband providers providing a minimum of ten m megabits per second downld speed and one megabit upload speed. As larry levine was saying, once we have enough competition, the issues or the conservative Net Neutrality<\/a> can disappear. Which might also suggested that they were not there to begin with. I also want to focus on blocked prioritization within the title ii regulation, which i think is the most harmful of those other than the general content, conduct standard. This rule was imposed despite the fact that content Service Providers<\/a> might be creating congestion. This rule was imposed despite the fact content Service Providers<\/a> might prefer, you might find it profitable to pay for paid prioritization. There are content Delivery Networks<\/a> that are in existence that are hired by content providers in order to speed up the rate at which the content is coming in. This policy as imposed with the title ii regulations, im going to steal from michael capps. He called it at the competition regulation. Basically, you are harming differentiation between different content providers and content services, or Service Providers<\/a>. Theres there is a difference bn something being intellectually free and being economically free. We are in no way of thinking get one might be interested in open internet. That doesnt mean a free internet. We know theres going to be reduced investment. It is obvious both from a theoretical perspective as well as an empirical one. There have been several studies, a study showing off all not just in the rate of growth of investment but an absolute decline in the level of investment, which is very suggestive of regulatory uncertainty. The consequence of this is reduced deployment, which will lead to reduced competition. We can never reduce quality of services, and what i think is particularly interesting will talk about the issues related to the Digital Divide<\/a> is the areas that the markers are going to be hit most by this reduction investment are going to be the economically marginal markets. If we care about access and adoption, these are rules that are going to make that much more difficult to have a much more difficult for the Digital Divide<\/a> to be reduced in the economy. One thing that was not mentioned today something called the waterbed effect, and thats also where the title ii regulation with no paid priority regulation is essentially an implicit subsidy that is being forced onto the internet Service Providers<\/a>, and given to the content Service Providers<\/a>. But in the waterbed effect, this subsidy can be passed on to the consumers. Thats passed on in a form of either higher prices and or decreased quality. So again, while the policy was intended for many different things, one of the impasses is directed onto the consumer. Within the issues of the Digital Divide<\/a>, this is not pushing at average prices for average consumers, if anything, is going to marginalize more people who have less income. So the big picture, now my deep, deep thoughts here. A certainty that is created by fake and continually changing regulation is a huge disincentive investment. Unless congress expressly states that an agency does not have authority particular market, at some point someone heading such an agency will make a regulatory grab. So i will geek out on you. In grad school when we talk about fixed Exchange Rate<\/a> policy they would say the following. Within finite time there is 100 probability of a fixed Exchange Rate<\/a>s failing. What im saying here is within finite time there is one of probability if someone making a regulatory grab, if they are not prevented from doing so. This grab when it occurs will occur without proof of harm, from a hypothetical risk, and without any credible analysis of the Economic Cost<\/a> of such regulation. So i absolutely support chairman pies marketbased approach and desire to move to light touch regulation. But i do feel that without some kind of congressional action this approach may only last as long as his chairmanship. I guess the good news is that technical progress can make certain restrictions, certain regulations become irrelevant. The bad news is if you have built in these catchall rules like the general conduct standard, then regulators can easily make new or random rules and actually help further slow future innovations. Bubut i guess the best news is that people like randy may and the Free State Foundation<\/a> help open up these discussions, bring very relevant speakers from the different areas, and keep us on task for that. So i want to say thank you again to the Free State Foundation<\/a> here todays event was quite spectacular and what you guys do everyday is quite spectacular. And the food is really good. [laughing] i know my wife especially appreciates, and kathy baker, that last remark, because of course they had most to do with that. What i want to say really is that having you here and listening to you is just another illustration, along with daniel lyons, both professors, as to why im so proud of our board of academic advisors. So both of you make me very proud to have you part of the Free State Foundation<\/a>. You know im about to end, and i want you to stay seated just a moment but we really should probably give Michelle Connolly<\/a> a round of applause. [applause] because those really were deep thoughts and important thoughts, and not just final thoughts. Only want to say really here to end up is, for those of you who were with us at the beginning i welcomed you this morning, and those of you in our cspan audience, i said, well, i said every year i say that our annual Telecom Policy<\/a> conference just keeps getting bigger, better, and more impactful. And i said that is going to keep on saying that as long as it is true. You know, im really, in my mind, and i hope in yours as well, really i think this was our biggest, best. I like to think they are all really impactful. Thats what we strive for but i think hopefully this was as well, and i want you thank you for being here. We always welcome your ideas and input, of whatever kind, and we especially, i consider, you know, there are a lot of battles that become ideological, and thats the way they should be because they are different philosophies, and i appreciate that. But i consider people that are working on this issue as friends, and i appreciate you being here. Look forward to seeing you at the next Free State Foundation<\/a> conference. Thank you very much. [applause] [inaudible conversations] American Jewish<\/a> community we will renew the sender does remarks and more from the conference life starting at 1 4n cspan2. Which is why broadband is so important, giving consumers more choice we more choice we cant get a cable through the broadband type. The companies that are taking the risk to build the networks are being criticized. They are made out to be villains are the companies are making all the cash of the internet he nodded for their wonderful innovation. Im not saying im not saying these are Bad Companies<\/a> in the sense they havent done amazingly innovative things. They make a ton of money off the internet. For them to go scot free with no regulation, said just to me that maybe that is not the right approach and maybe we should look at who is making all the money and why are they able to take so much out of the system . Its because they are selling your information. Former fbi director james comey will testify thursday before the Senate Intelligence<\/a> committee the bbcs David Dimbleby<\/a> hosted the special edition of question time with reddish Prime Minister<\/a> theresa may and Jeremy Corbin<\/a> ahead of thursdays elections. 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