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FTC Report on Broadband Resurrects Freedom of Service Information

The Federal Trade Commission intends to monitor the information that telecom and cable companies provide about high-speed Internet service in the service plans they offer to customers, according to a report issued last week by the agency.

The FTC asserts in the report, released on June 27, that since it has jurisdiction over matters involving consumer protection, it "will continue to enforce the consumer protection laws in the area of broadband access."

The 165-page report has been greeted as inadequate by groups seeking network neutrality requirements, or rules barring broadband companies from offering expedited service to favored businesses.

Net neutrality was much debated last year, when Congress considered a major overhaul of telecommunications law. The bill foundered when the Senate failed to pass an amendment imposing Net neutrality rules.

Telecommunications carriers in turn praised the FTC report for its cautionary language against new neutrality rules.

The FTC report includes a recitation of varying views for and against Net neutrality expressed at an FTC workshop in February 2007. Most of the report focuses on the antitrust implications of broadband competition.

The sections on consumer protection promise a more active role by the FTC. The FTC appears to be carving out a niche in monitoring behavior by companies that offer broadband service.

The FTC embraces and resurrects a policy statement on Net neutrality made by former Federal Communications Commissioner Chairman Michael Powell.

That statement - concerning the "freedom to obtain service plan information" from broadband carriers - has since been dropped by the FCC.

The consumer protection sections of the FTC report raise this question: are broadband providers engaging in a deceptive practice when they advertise a connection speed of, for example, "up to" 768 kilobits per second (kbps) - and yet actual speeds are considerably lower?

There are lingering "questions involving the clear and conspicuous disclosure of material terms of broadband Internet access," including these advertised service speeds, the report notes.

If the commission determines that claims about Internet connection speeds are "material" to the contracts that providers make with consumers, it could enforce such a breach. Alternatively, the report raises the prospect that the FTC might develop "guidance to industry regarding the critical information that broadband providers should disclose to their customers and potential customers."

"Such enforcement will remain crucial to fostering competition in the broadband area - with or without the enactment of some form of network neutrality legislation," the report concluded.

"I agree that we have the authority that we need to do consumer protection in this arena," FTC Commissioner Jon Leibowitz, a Democrat, said in a Tuesday interview.

"When then-FCC Chairman Michael Powell spoke about what he called the four 'Internet Freedoms' in 2004, one of his principal concerns was with protecting consumers from having to choose Internet service plans without sufficient information about those plans from broadband providers," Leibowitz wrote in a concurrent statement released along with the FTC report.

Powell's four freedoms also included consumers' freedom to access content, consumers' freedom to use Internet applications, and consumers' freedom to attach personal devices to the Internet in their homes.

With minor variations, those three principles are included in the FTC's August 2005 policy statement on Net neutrality. But the statement about the availability of service plan information was replaced by the principle that there should be "competition among network providers, application and service providers, and content providers."

Powell left the agency and was succeeded by Kevin Martin as chairman in March 2005.

"Powell thought [service plan information] was so important that it should be included as a basic freedom, something that consumers should absolutely have access to, just like we can look at a label and know what the ingredients are in any given food," said David Isenberg, a telecom consultant critical of the Bell companies and supportive of Net neutrality.

"As to why it disappeared under the Martin FCC, I can only assume that it was because the industry didn't want to divulge that," Isenberg said.

An FCC official said that the issue of issue of broadband service plans had never been adopted as agency policy, and was not being considered in the current Net neutrality inquiry.

However, the question of whether companies should "categorize broadband connection by the download and upload speeds experienced by actual customers rather than the theoretical maximum that a given network can support" has been raised in a separate ongoing FCC proceeding on broadband data.

The FTC report, and Leibowitz in particular, emphasize the FTC's role in enforcing advertised claims about speed and service availability.

"That Freedom is particularly important to us at the FTC," Leibowitz declared in his statement. "It implicates some of the most important issues regarding consumer rights on the Internet - transparency and disclosure. Will carriers slow down or interfere with applications or services? If so, will consumers be told about this before they sign up? How fast will a consumer's Internet connection actually be? Will they get adequate information about it? To my mind, failure to disclose such material terms could be considered 'unfair or deceptive' in violation of the FTC Act. I have no doubt that the FTC will move aggressively to protect consumers using our existing authority."

In the Tuesday interview, Leibowitz said he issued his concurring statement because he wanted to underscore the fact that actions by broadband carriers may "be anticompetitive even if they don't rise to the level of an antitrust violation."

The FTC splits jurisdiction of antitrust matters with the Justice Department, although the FTC has specific authority over "unfair or deceptive acts or practices in or affecting commerce."

According to Maureen Ohlhausen, director of the FTC's Office of Planning and the chair of the Internet Access Task Force, the goal of the report was "not try to define any relevant antitrust market" because it "did not seem appropriate or necessary."

The FTC lacked data about specific practices in the competition arena, and did not undertake one because it would be "expensive and [take] a long time complete," said Ohlhausen. She did not comment on further investigation into broadband provider's potentially deceptive marketing practices regarding Internet speeds.

Originally posted at Drew Clark's website and Center for Public Integrity. Andrew MacRae, Center for Public Integrity Reporter, contributed to this report.

By Drew Clark, Executive Director at BroadbandCensus.com, Telecom, Media and Tech Journalist

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