Federal Communications Commission Chairman Ajit Pai and his counterpart at the Federal Trade Commission today argued that strict privacy rules for ISPs aren't necessary in part because the broadband market is more competitive than the search engine market.

Internet users who have only one choice of high-speed home broadband providers would probably scoff at this claim. But an op-ed written by Pai and Acting FTC Chair Maureen Ohlhausen ignored the lack of competition in home Internet service, focusing only on the competitive wireless broadband market. Because of this competition, it isn't fair to impose different rules on ISPs than on websites, they wrote.

"Others argue that ISPs should be treated differently because consumers face a unique lack of choice and competition in the broadband marketplace," Pai and Ohlhausen wrote in their op-ed for The Washington Post yesterday. "But that claim doesn’t hold up to scrutiny either. For example, according to one industry analysis, Google dominates desktop search with an estimated 81 percent market share (and 96 percent of the mobile search market), whereas Verizon, the largest mobile broadband provider, holds only an estimated 35 percent of its market."

Little choice at customers’ homes

Total market share is a relevant statistic in mobile because customers really do have a choice, from four major nationwide carriers and various resellers and regional carriers. In home Internet service, a similar nationwide market share stat would on the surface show even more diversity of broadband companies, as even the nation's largest home ISP (Comcast) doesn't reach 35 percent.

But for home Internet customers, the relevant point is whether they can choose from multiple providers at their home or apartment. And they frequently can't, since ISPs often avoid each other's territory.

The latest FCC report on this topic found that 76 percent of developed Census blocks had either zero or one fixed ISP offering speeds at the FCC's broadband standard of 25Mbps downstream and 3Mbps upstream. There's more competition at lower speeds, but there were still 22 percent of developed Census blocks with only one or two ISPs offering the paltry speeds of 3Mbps/768kbps.

Instead of addressing the lack of competition in home Internet service, Pai and Ohlhausen simply didn't mention it in their op-ed. But they argued that ISPs shouldn't face stricter privacy rules than search engines and other websites because of the level of competition in broadband and the amount of data companies like Google collect about Internet users.

"As a result, it shouldn’t come as a surprise that Congress decided to disapprove the FCC’s unbalanced rules," they wrote. "Indeed, the FTC’s criticism of the FCC’s rules last year noted specifically that they 'would not generally apply to other services that collect and use significant amounts of consumer data.'"

While Pai and Ohlhausen say that ISPs don't have any special insight into consumer Web browsing activity, the FCC's previous Democratic leadership concluded the opposite, noting that ISPs can see all unencrypted Internet traffic in and out of customers' homes. Democrats also pointed out that it's much more difficult to switch ISPs than it is to switch from one website to another.

Opt-out vs. opt-in

The FTC regulates websites like Google and Facebook, requiring them to give users a way to opt out of personalized advertising based on their browsing histories. The FCC rules passed last year would have required fixed and mobile ISPs to abide by a stricter opt-in system. In other words, ISPs wouldn't be able to use, share, or sell customers' browsing histories without their prior consent.

Congress struck down those rules before they could be implemented, an action confirmed this week by President Donald Trump's signature.

"Let’s set the record straight: First, despite hyperventilating headlines, Internet service providers have never planned to sell your individual browsing history to third parties," Pai and Ohlhausen wrote. "That’s simply not how online advertising works. And doing so would violate ISPs’ privacy promises."

ISPs, including Comcast, AT&T, Verizon, and Charter, said last week that they don't sell customers' browsing histories. But their lobby groups pushed the government to eliminate rules that would have prevented them from selling or sharing browsing histories in the future. The now-defunct rules also would have required ISPs to get opt-in consent before using browsing data, and that's relevant because ISPs can analyze customer browsing data internally in order to sell personalized ads. Comcast, AT&T, and Verizon operate their own advertising networks.

The FTC currently doesn't regulate broadband providers because the agency has no authority over common carriers. The FCC decision to reclassify ISPs as common carriers in 2015 was primarily used to implement net neutrality rules, but it also shifted broadband privacy oversight from the FTC to the FCC.

Pai and Ohlhausen wrote that they will be "working together to restore the FTC’s authority to police ISPs’ privacy practices," but offered no further details. This would likely involve the FCC reversing the common carrier classification, which would also result in the elimination of net neutrality rules. Pai has been a staunch opponent of the FCC's net neutrality rules that prevent ISPs from blocking or throttling lawful Internet traffic and charging companies for prioritization.

When contacted by Ars, an FCC spokesperson today said they can't offer a timeline for when Pai will unveil a specific privacy plan.