International Journal of Communications Law & Policy

OPTING IN IS OUT: BALANCING TELECOMMUNICATIONS CARRIER COMMERCIAL SPEECH RIGHTS WITH CONSUMER DATA PRIVACY
By Shaun Sparks

Download the Paper in PDF Format: IJCLP Web-Doc 7-5-2000

Abstract

In early 1998, the Federal Communications Commission (FCC) adopted an order broadly interpreting the consumer data privacy protection addressed in section 222 of the Telecommunications Act of 1996. That Order stated that telecommunications carriers must obtain express customer permission before using certain types of customer data obtained by virtue of the carrier-customer relationship. Section 222 of the Act defines information obtained via the carrier-customer relationship as Consumer Proprietary Network Information (CPNI). CPNI is information relating to the "quantity, technical configuration, type, destination, and amount of use of a telecommunications service subscribed to by any customer of a telecommunications carrier." CPNI includes information such as when a customer makes a call, whom and where a customer calls, and services to which a customer may subscribe. The FCC requirement of express customer consent, before carrier use of CPNI, imposed substantial restrictions on the marketing activities of carriers. US West, Inc. (US West), challenged the FCC's interpretation of section 222 in the Tenth Circuit. US West alleged that requiring express customer consent, before using CPNI as a marketing tool, was a constitutionally impermissible restriction on its ability to engage in commercial speech with its customers. The FCC responded that its interpretation of the customer approval requirements in section 222 raised no constitutional concerns, was reasonable, and was entitled to deference by the court. The Tenth Circuit decided in favor of US West, vacating the FCC's CPNI Order. Part II of this paper briefly examines the background of consumer data privacy concerns. It also briefly examines other commercial speech restrictions similar to the CPNI restrictions in section 222. Part III details the regulatory requirements imposed by section 222, and explores the conflict between competing interpretations of that section. Part IV discusses carrier challenges to the FCC's interpretation in the rulemaking process. Parts V and VI examine the Tenth Circuit's analysis of the CPNI Order under the Central Hudson doctrine. Part VII briefly examines the ability of the FCC, through the Administrative Procedures Act, to regulate carriers' use of consumer database information. This comment reaches the conclusion that the FCC, by attempting to enact strong data privacy measures, defeated its mission of structuring a competitive, deregulatory communications paradigm. What then is the proper role of the FCC in regulating telecommunications customer data privacy? Without substantial evidence showing real harm from free-market data use, the FCC's role as a regulator of data privacy is questionable at best. The FCC must develop evidence sufficient not only to show a need for data protection, but also to overcome the adverse balance of costs imposed by broad data privacy restrictions.

Telecommunications carriers, on the other hand, can successfully fight restrictive customer data regulations on grounds of commercial speech. They can force the FCC into the awkward position of having to produce regulatory justifications that have extremely limited evidentiary support. In addition, that same strategy forces the FCC into a position where the normally deferential standards surrounding the Administrative Procedures Act do not assist the FCC when those regulations are subject to judicial review.

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