Confusing Convergence: How Courts Misunderstand Internet-Delivered Services
Posted: 20 Mar 2017
Date Written: March 2017
This paper will demonstrate that converging information, communications and entertainment (“ICE”) markets and technologies challenge the ability of regulatory agencies and reviewing courts to apply statutory definitions of service such as telecommunications and common carriage. Because carriers offer many services and devices, such as smartphones, a single all-encompassing regulatory classification cannot always apply.
The paper recommends that courts recognize the lack of certainty presented by convergence and embrace a developing body of case precedent recognizing that common carriage services do not typically exist on a mutually exclusive basis with other private information services. If courts and regulatory agencies accept the blurring of so-called, bright line service distinctions, jurisdictional and statutory interpretations can occur with greater flexibility leading to greater certainty that both regulatory over-reach and under-reach will not occur.
Courts reviewing the regulatory actions of the Federal Communications Commission (“FCC”) and the Federal Trade Commission (“FTC”) have evidenced great difficulty in incorporating the consequence of convergence in their decisions. For example, a recent decision by the Ninth Circuit Court of Appeals questioned whether the FTC has any jurisdiction to sanction deceptive or unfair acts and practices by Internet Service Providers (“ISPs”) if they also operate as common carriers providing telecommunications service.
In a convergent world, the FCC and FTC should coordinate and calibrate investigations based on their expertise and whether a venture has engaged in questionable practices in its capacity as a common carrier, telecommunications service provider, or something else. The court refused to approve of such shared jurisdiction so that the FTC could investigate possible misrepresentation about the scope and nature of “unlimited” wireless data service as well as whether and when a wireless carrier could “throttle” the speed of bit transmission when subscribers exceed a monthly usage threshold. The court rejected the view that a wireless carrier could offer subscribers both common carrier and private carrier services, thereby triggering different levels of regulatory oversight from both FCC and FTC. In light of the FCC’s reclassification of broadband data service as common carriage, the court concluded that the FTC had no jurisdiction whatsoever, because it lacked authority to oversee at least one of the many different types of services available to smartphones via wireless carriers.
This decision largely eliminates FTC regulatory safeguards for ICE services at the same time the FCC appears reluctant to impose broadband subscriber privacy safeguards. With both regulatory agencies unable or disinclined to address real privacy concerns, the possibility exists that major privacy and cybersecurity concerns will go unprotected absent new thinking about regulatory classifications in a converging, Internet ecosystem.
Keywords: convergence, FCC, FTC, jurisdiction, common carriage, telecommunications service, throttling, unlimited data
JEL Classification: K23, L43, L82, L86, L96
Suggested Citation: Suggested Citation