Editor’s note: We’ve heard a lot recently about what new FCC Chairman Ajit Pai thinks about measures like net neutrality and broadband privacy. But in the event that these items revert back to the control of the FTC, it’ll be equally important to know the stance of Maureen Ohlhausen, President Donald Trump’s pick to head that Commission.
Here’s Anna-Maria Kovacs, Visiting Senior Policy Scholar at the Georgetown Center for Business and Public Policy, to break it down for us.
In her speech to the ABA 2017 Consumer Protection Conference, Federal Trade Commission (FTC) Acting Chairman Maureen Ohlhausen summarized her view of the FTC’s mission: “We are seeking to ensure that consumers are better off.” She believes that consumers are best served by competitive markets, rather than pre-emptive regulation. She relies on a combination of antitrust oversight and vigilant enforcement to protect consumers from harm.
The hallmark of Ohlhausen’s philosophy is the recognition that regulatory and enforcement actions have costs as well as benefits. Essentially, regulators’ actions create risks for companies. If these actions are well-calibrated, those risks disincent behaviors that harm consumers. If they are excessive, they disincent experimentation and innovation that may be beneficial to consumers.
Thus, Ohlhausen advocates for a careful analysis of both the costs and benefits of regulatory action. Again and again, her speeches and articles argue that regulators should focus on actual harm to consumers, rather than hypothetical possibilities. In the context of the internet, she has written extensively about two areas: net neutrality and privacy.
Ohlhausen supports an open internet, i.e. making sure that traffic reaches its destination as the sender intends, but she does not support the method taken by the FCC’s 2015 Open Internet Order. That order imposed common-carrier regulation designed for monopolies on all internet service providers (ISPs), including the many that operate in a competitive market.
In an article titled “Antitrust over Net Neutrality: Why We Should Take Competition in Broadband Seriously,” Ohlhausen argues for an antitrust approach to internet openness. That would allow regulators to intervene if competition fails to protect consumers, without distorting the market if it is working well. The FCC’s own Order showed that such cases of market failure are very rare and have been quickly resolved on a case-by-case basis. Thus, she argues that there was little actual consumer harm to justify the FCC’s imposition of a common-carrier regime on ISPs.
Given minimal harm without ex ante regulation, there is little benefit from imposing it. However, there is a cost that comes with it. Ohlhausen argues that the FCC’s approach to net neutrality hurts consumers because it restricts the choices ISPs are allowed to offer their customers. Consumers have different preferences and gain if ISPs are free to experiment to create a variety of services. Instead, the restrictions the FCC imposed to please net-neutrality advocates limit innovation.
Ohlhausen also seeks a harms-based approach to privacy, which is a particularly challenging area for regulators in a world of ubiquitous data collection and imperfect cybersecurity. The FCC’s designation of ISPs as common carriers has only magnified the problem. It is important to have a coherent privacy regime across the internet, but that is not the case today. Because the FTC is not allowed to regulate common carriers, there is a discontinuity in jurisdiction between the FCC and the FTC. Furthermore, entities that are owned by common carriers but perform non-common-carrier functions currently fall into a non-man’s land regulated by neither. As a result, a single transmission is covered by very different levels of protection as it passes from the originating ISP through one or more additional platforms on its path from sender to recipient. This inconsistency is likely to create confusion and distrust.
Ohlhausen makes a compelling argument for focusing on consumers rather than ideology, for balancing the costs with the benefits of any regulatory action. Such regulatory humility will ensure that consumers are better off.
Anna-Maria Kovacs is a Visiting Senior Policy Scholar at the Georgetown Center for Business and Public Policy. She has covered the communications industry for more than three decades as a financial analyst and consultant.
Filed Under: Industry regulations, Cybersecurity