The Federal Communications Commission (FCC) has imposed a record $100M forfeiture fine against a global telecommunications company for alleged deceptive data plan promotions. The FCC’s fine comes on the heels of revisions to its 2010 Open Internet rules that expanded its enforcement authority over “telecommunications service” providers to cover broadband Internet service providers (ISPs). Under this expanded authority the FCC is expected to continue to pursue enforcement actions against telecommunications service providers not only for deceptive business practices, but increasingly to enforce data privacy and security principles against telecommunications service providers that collect certain data on their customers, as illustrated by the $35M in aggregate fines issued by the FCC against TerraCom, Inc., YourTel America, Inc., and a global telecommunications company in the past year. Consumer groups are calling for the FCC’s authority to be expanded even further to those companies that offer services, products, and applications over broadband Internet service – “edge providers” – such as Facebook, Google, and Amazon. The expansion of the FCC’s enforcement authority to ISPs and potential expansion to edge providers, coupled with its ability to levy fines, suggests that the FCC has the potential to emerge as a major enforcer in the privacy and online consumer protection arena, usurping power traditionally reserved for the primary regulator of online advertising, privacy, and data security – the Federal Trade Commission (FTC).
FCC Expands Its Role
In its most recent and significant enforcement action, the FCC alleged that a global telecommunications company (“Company”) violated its 2010 Open Internet Transparency Rule by offering customers an “unlimited” mobile broadband data plan without clearly disclosing that connection speed would be reduced by up to 20 times its normal speed if the customer used more than 5 GB of data in a billing cycle. The FCC found the Company’s disclosures were deceptive and inadequate to allow customers to make an informed decision and imposed a $100M forfeiture on the Company “as a deterrent to future violations.” At a minimum, the fine evidences the FCC’s most important power that is distinct from that of the FTC – a broader ability to levy fines. Continue Reading