OMB: Thumbs Up for Net Neutrality Provisions

After months of quiescence, net neutrality is on the move

The net neutrality rules have cruised past another hurdle: the Office of Management and Budget (OMB) has approved the two “information collection” aspects of the “open Internet” rules that the FCC shipped over there last July (as required by the Paperwork Reduction Act). While OMB approved those aspects almost two weeks ago (on September 9), the official announcement of the approval didn’t make it into the Federal Register until September 21.

OMB approval often marks the end of the rulemaking process in many instances; not so here. New rules generally cannot take effect until their full text has been published in the Federal Register. In many other rulemakings, the Commission takes care of that full-text publication first, and then follows up with getting OMB approval for any incidental “information collections” that may be involved.  As a result, OMB approval of such collections is often the last development in the rulemaking process.

It hasn’t gone down that way with net neutrality.

Instead, the Commission went first to OMB to get preliminary clearance for the “information collection” components of the rules. Meanwhile, the FCC has held tight onto the full text of the rules. While that approach has prevented the net neutrality rules from taking effect, it has also prevented any would-be challengers from seeking judicial review of the rules. Federal Register publication of new rules is the starting gun for the appellate process. Until that publication happens, the courts don’t get involved. (Verizon was reminded of that when its initial appeal was tossed by the D.C. Circuit as premature.) 

According to various trade press reports, the Commission has sent the full text of the rules to the Government Printing Office for publication in the Register in the next couple of weeks. (Note that we heard similar reports months ago and they didn’t pan out – so you might not want to bet the farm on this.) Once the rules are published, we can expect a stampede of appellate litigators heading toward their preferred U.S. Court of Appeals. (Any of the federal circuit courts of appeals are permitted to take this kind of case.) The smart money figures that petitions for review will be filed with a number of circuits. When that happens, the courts draw straws to decide which court gets it. That’s an oversimplification, of course – they don’t draw straws; they pull an entry out of a drum. Actually, the various cases are referred to the Judicial Panel on Multidistrict Litigation, which then does indeed pull a lucky entry out of a drum to determine which court gets the case. (The Commission has released a detailed notice explaining how to assure proper participation in such a lottery.)

In any event, after months of quiescence, it looks like net neutrality is on the move. Check back here for updates.

Net Neutrality Lands at OMB

Next round of Paperwork Reduction Act review of the “open Internet” information collection requirements starts at OMB.

We have progress to report on the net neutrality front!  Well, sort of.

The Commission has shipped two “information collection” aspects of the “open Internet” rules over to the Office of Management and Budget for its review. Yes, we know that we expected the Commission was going to take care of this chore a couple of months ago – but let’s get past that. The fact is: OMB review of net neutrality has begun, as required by the Paperwork Reduction Act (PRA).

(If you’re confused about the whole OMB review process and how it fits into the plan to effectuate the net neutrality rules, check out our earlier post addressing such things.)

Interested parties may submit their comments on either the net neutrality formal complaint process and/or the mandatory disclosure of network management practices, performance and commercial terms of access. You can find directions on how to do so in the notices (linked in the preceding sentence) published in the Federal Register. This round of comments will go to OMB, rather than the Commission (which fielded the last round of such comments starting back in February). You’ve got until August 8, 2011 to fill the OMB in on your views.

When the PRA review process started back in February, we observed that the information the FCC had made available up to that point provided less than clear guidance about just what the various new net neutrality requirements will entail. The latest notices announcing OMB review don’t add anything – which means that would-be commenters are still flying at least somewhat blind.

Note that the Federal Register notices announcing this next step in the PRA process do NOT mean either that the net neutrality rules are now effective, or that they are now subject to judicial review. Before anybody will be able to appeal the new rules, those rules will have to be published in toto in the Federal Register. 

And before the new rules can be effective, they not only will have to have been published, they will also have to have been approved by OMB. That won’t happen before August 8 for sure – but it could happen very soon after that date, if OMB has no problem with the rules. We’ll keep you posted.

Net Neutrality Update: Coming soon - OMB Review!

But effectiveness of the new rules is still months away, at least

The Commission’s Open Internet (a/k/a Net Neutrality) initiative has taken a tangible step forward with the announcement that the FCC is getting ready to ship two “information collection” aspects of the rules over to the Office of Management and Budget (OMB) for its review. But don’t hold your breath – it’ll take at least a couple of months to get there.

OMB review is mandated by our old friend, the Paperwork Reduction Act, which requires agencies to quantify and justify “information collection” burdens before imposing them on regulated industries or the public. The idea is that OMB may perceive regulatory excess that the FCC has somehow overlooked and slam the brakes on the process.

The two Net Neutrality information collections in question? First, there are the formal complaint procedures to be used to resolve “open Internet disputes” when other, less formal, means don’t do the trick. And second, we have the requirement that broadband providers disclose their network management practices. Unfortunately, the FCC’s Federal Register notices concerning its proposals afford no particular insight into just what the complaint and disclosure requirements will involve. That may complicate the task of preparing comments on the proposals.

But wait – doesn’t the Net Neutrality order itself fill in some of the gaps in the notices? Some, maybe . . . but not all.

The formal complaint process is addressed at Paragraphs 154-159 of the Net Neutrality order. The bottom line appears to be that a complainant is expected to “plead fully and with specificity the basis of its claims and to provide facts, supported when possible by documentation or affidavit, sufficient to establish a prima facie case of an open Internet violation.” The target of the complaint can then answer each claim in the complaint, “demonstrating the reasonableness of the challenged practice.” The complainant can then try to rebut that.

The network management practices disclosure requirement is covered in Paragraphs 56-61 of the order. There the Commission provides an extensive list of types of information that might be disclosed. But the FCC emphasizes that the list is “not necessarily exhaustive, nor is it a safe harbor.” Talk about wiggle room! And just how is the information to be disclosed? That, too, is a bit up in the air. It’s got to be posted on a “publicly available, easily accessible website”, and must also be provided at the point of sale. According to the Commission, “[c]urrent end users must be able to easily identify which disclosures apply to their service offering.” The Commission declined to specify any particular format for the disclosures.

In the Federal Register notice, the FCC summarizes the disclosure requirement as mandating disclosure of “accurate information regarding the network management practices, performance, and commercial terms of their broadband Internet access services sufficient for consumers to make informed choices regarding use of such services and for content, application, service, and device providers to develop, market, and maintain Internet offerings.” A standard defined by what might be deemed (by whom? the FCC? the consumer?) “sufficient” to allow “consumers” to make “informed choices” doesn’t seem to be much of a “standard” in the traditional sense, but you never know.

So anyone inclined to file comments on either of these proposals may find it tricky to get a firm grip on precisely what burdens are likely to be involved here. (For the record, we asked the FCC if it could let us know what its proposed information collections would entail – above and beyond what is shown in the Federal Register notices. We were directed to the paragraphs of the order mentioned above, along with Appendices A and B to the order.)

What happens next?

Anyone who wants to comment on either (or both) of the proposals has two (count ‘em, two) opportunities to do so. First off, between now and April 11, you can submit comments to the Commission. According to the FCC’s notices, comments should address: 

(a) Whether the proposed collection of information is necessary for the proper performance of the functions of the Commission, including whether the information will have practical utility; (b) the accuracy of the Commission’s burden estimate; (c) ways to enhance the quality, utility, and clarity of the information collected; (d) ways to minimize the burden of the collection of information on the respondents, including the use of automated collection techniques or other forms of information technology; and (e) ways to further reduce the information collection burden on small business concerns with fewer than 25 employees.

Once April 11 comes and goes, the Commission will package up any and all comments and ship them to OMB, along with its proposed information collections and a separate “supporting statement”. At that point, interested parties will have a 30-day opportunity to let OMB know what they think. The Commission will then have a chance to respond to any incoming comments and/or questions that OMB might pose. Its response may include revising either or both proposals. (Note – Neither OMB nor the FCC provides any public notice of any such post-comment period revisions. If you’re diligent, you should be able to find out about them by checking the OMB website on a daily basis . . . but that may prove an empty exercise, since OMB affords no formal opportunity to comment on any such on-the-fly revisions.) 

Once OMB is satisfied that the FCC’s proposals are consistent with the Paperwork Reduction Act, OMB will issue its approval. That approval will be formally announced in the Federal Register and, 60 days after that announcement, all of the Open Internet rules adopted last December are set to become effective.

So even in the fastest scenario – where the FCC would send its proposals to OMB immediately after the close of the April 11 comment period, and OMB would in turn approve the proposals immediately after the close of its own 30-day comment period, and the announcement of that approval would be published instantaneously with the issuance of the approval – we’re still looking at 120 days at the very least before the Net Neutrality rules can be expected to take effect.

One more timing consideration. Within a matter of days, if trade press reports are to be believed, the Commission should be publishing the Open Internet order itself in the Federal Register. That publication will mark the opening of a 60-day period during which petitions for review of the order may be filed pursuant to Section 402(a) of the Communications Act. Two appeals of the order have already been filed pursuant to Section 402(b), although the FCC has moved to dismiss both of them. In any event, it is virtually certain that some parties – and maybe a lot of parties – will be seeking judicial review of the order before the rules become effective. Should a reviewing court conclude that a stay of the rules is warranted, the effective date could be pushed back indefinitely.

How Much Is a Child Worth to You?

Well, to Sony BMG Entertainment group, the answer was recently "about $ 33.00".  That's the amount per child Sony paid in settling a civil action brough by the US government for violations of the Children's Online Privacy Protection Act (COPPA), a federal law enacted in 1998 and implemented by the FTC in 2000. 

While the financial portion of the settlement -- $ 1 million -- may not be much to Sony BMG Entertainment, it should serve as a warning to smaller companies with a kid-friendly web presence that they need to learn about and abide by COPPA.  Any broadcast television or radio station that dedicates a portion of its website to children's programming, a "Kid's Club" or "Birthday Club", etc., or otherwise directs content to or collects information from children under the age of 13 should definitely read further. 

Under COPPA, the FTC has the power to ensure that personal information relating to children under the age of 13 is not collected or distributed without parental consent.

The law applies to your website if

  • You operate a commercial website or online service directed to children under the age of 13. This would include any page within a website of general operation that is specifically directed to children under the age of 13, such as a page within the website for kids. 

    OR
     
  • You run a general commercial website or online service and have actual knowledge that you are collecting personally identifying information from children under the age of 13.    Actual knowledge is defined as “asking for and receiving information from which the age of the user can be determined to be under the age of 13.” The most obvious situation would be where the website, in the course of collecting information from a user, asks for the user’s age or date of birth. 

"Personally identifying information” includes:

  • First and last name
  • Home or other physical address, including street name and name of a city
  • E-mail address
  • Social Security number
  • Any other information that could specifically identify the child

The easiest way to avoid triggering COPPA is simply not to collect personally identifying information from children under the age of 13. A website that falls into either category listed above must comply in six different ways.  

  1. The website must post a clear and comprehensive privacy policy on the website describing how it collects and protects personally identifying information obtained from children. 
     
  2. The website must (a) provide direct notice to parents of the intended collection of personally identifying information and (b) obtain verifiable parental consent before collecting that information (in other words, once you have identified that you are about to collect personally identifying information about a child, you must stop the collection process until you have a parent’s consent to move forward). 
     
  3. The website must offer the parent the choice of consenting to the collection and use of the information – it cannot force the parent to comply – and must also allow the parent to prohibit the website operator from sharing that information to third parties. 
     
  4. The website must allow a parent to access his or her child’s personally identifying information at any time in order to review the information that the website has collected from that child. 
     
  5. The website must give parents the opportunity to opt-out of further use or collection of a child’s information at any time.
     
  6. The website must take steps to maintain the confidentiality, security and information of the information it collects from children under the age of thirteen.

Sony BMG Entertainment failed to follow these requirements in many significant ways, leading to the filing of a civil lawsuit by the federal government that ended in a consent decree  which, in addition to imposing the $1 million forfeiture, requires significant changes to Sony BMG Entertainment websites and  the company's general operating policies (including educational outreach about children's privacy for the next five years). Specifically, Sony BMG Entertainment, on more than 1,000 of its websites, enticed over 30,000 children to sign up for various fan clubs and then distributed the information without parental consent to others by signing the children up for contests and sweepstakes. So the $1 million price tag, spread over 30,000 kids, comes to about $33.00 per child.

 

We suspect that many of you broadcasters allow children to sign up for various contests or promotions through your sites.  You may even share this information with other stations or affiliated companies.  STOP!!!  The message should be clear: either study up on and comply with COPPA (we can help with this) or don't collect any personally identifying information from your younger viewers or listeners . . . or be prepared to face expensive litigation.