[Federal Register Volume 81, Number 232 (Friday, December 2, 2016)]
[Rules and Regulations]
[Pages 87274-87346]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-28006]
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Vol. 81
Friday,
No. 232
December 2, 2016
Part IV
Federal Communications Commission
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47 CFR Part 64
Protecting the Privacy of Customers of Broadband and Other
Telecommunications Services; Final Rule
Federal Register / Vol. 81 , No. 232 / Friday, December 2, 2016 /
Rules and Regulations
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FEDERAL COMMUNICATIONS COMMISSION
47 CFR Part 64
[WC Docket No. 16-106; FCC 16-148]
Protecting the Privacy of Customers of Broadband and Other
Telecommunications Services
AGENCY: Federal Communications Commission.
ACTION: Final rule.
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SUMMARY: In this document, the Federal Communications Commission
(Commission) adopts final rules based on public comments applying the
privacy requirements of the Communications Act of 1934, as amended, to
broadband Internet access service (BIAS) and other telecommunications
services. In adopting these rules the Commission implements the
statutory requirement that telecommunications carriers protect the
confidentiality of customer proprietary information. The privacy
framework in these rules focuses on transparency, choice, and data
security, and provides heightened protection for sensitive customer
information, consistent with customer expectations. The rules require
carriers to provide privacy notices that clearly and accurately inform
customers; obtain opt-in or opt-out customer approval to use and share
sensitive or non-sensitive customer proprietary information,
respectively; take reasonable measures to secure customer proprietary
information; provide notification to customers, the Commission, and law
enforcement in the event of data breaches that could result in harm;
not condition provision of service on the surrender of privacy rights;
and provide heightened notice and obtain affirmative consent when
offering financial incentives in exchange for the right to use a
customer's confidential information. The Commission also revises its
current telecommunications privacy rules to harmonize today's privacy
rules for all telecommunications carriers, and provides a tailored
exemption from these rules for enterprise customers of
telecommunications services other than BIAS.
DATES: Effective January 3, 2017, except for Sec. Sec. 64.2003,
64.2004, 64.2006, and 64.2011(b) which contain information collection
requirements that have not yet been approved by OMB. The Federal
Communications Commission will publish a document in the Federal
Register announcing the effective date of these rules upon approval.
Section 64.2005 is effective March 2, 2017.
FOR FURTHER INFORMATION CONTACT: For further information about this
proceeding, please contact Sherwin Siy, FCC Wireline Competition
Bureau, Competition Policy Division, Room 5-C225, 445 12th St. SW.,
Washington, DC 20554, (202) 418-2783, fcc.gov">sherwin.siy@fcc.gov. For
additional information concerning the Paperwork Reduction Act
information collection requirements contained in this document, send an
email to fcc.gov">PRA@fcc.gov or contact Nicole Ongele at (202) 418-2991.
SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Report
and Order in WC Docket No. 16-106, FCC 16-148, adopted October 27, 2016
and released November 2, 2016. The full text of this document is
available for public inspection during regular business hours in the
FCC Reference Information Center, Portals II, 445 12th Street SW., Room
CY-A257, Washington DC 20554. It is available on the Commission's Web
site at https://apps.fcc.gov/edocs_public/attachmatch/FCC-16-148A1.pdf.
The Commission will send a copy of this Report and Order in a report to
be sent to Congress and the Government Accountability Office pursuant
to the Congressional Review Act, see 5 U.S.C. 801(a)(1)(A).
Synopsis
I. Introduction
1. In this Report and Order (Order), we apply the privacy
requirements of the Communications Act of 1934, as amended (the Act) to
the most significant communications technology of today--broadband
Internet access service (BIAS). Privacy rights are fundamental because
they protect important personal interests--freedom from identity theft,
financial loss, or other economic harms, as well as concerns that
intimate, personal details could become the grist for the mills of
public embarrassment or harassment or the basis for opaque, but harmful
judgments, including discrimination. In adopting section 222 of the
Communications Act, Congress recognized the importance of protecting
the privacy of customers using telecommunications networks. Section 222
requires telecommunications carriers to protect the confidentiality of
customer proprietary information. By reclassifying BIAS as
telecommunications service, we have an obligation to make certain that
BIAS providers are protecting their customers' privacy while
encouraging the technological and business innovation that help drive
the many benefits of our increasingly Internet-based economy.
2. Internet access is a critical tool for consumers--it expands our
access to vast amounts of information and countless new services. It
allows us to seek jobs and expand our career horizons; find and take
advantage of educational opportunities; communicate with our health
care providers; engage with our government; create and deepen our ties
with family, friends and communities; participate in online commerce;
and otherwise receive the benefits of being digital citizens. Broadband
providers provide the ``on ramp'' to the Internet. These providers
therefore have access to vast amounts of information about their
customers including when we are online, where we are physically located
when we are online, how long we stay online, what devices we use to
access the Internet, what Web sites we visit, and what applications we
use.
3. Without appropriate privacy protections, use or disclosure of
information that our broadband providers collect about us would be at
odds with our privacy interests. Through this Order, we therefore adopt
rules that give broadband customers the tools they need to make
informed choices about the use and sharing of their confidential
information by their broadband providers, and we adopt clear, flexible,
and enforceable data security and data breach notification
requirements. We also revise our existing rules to provide harmonized
privacy protections for voice and broadband customers--bringing privacy
protections for voice telephony and other telecommunications services
into the modern framework we adopt today.
4. In response to the Notice of Proposed Rulemaking (NPRM), we
received more than 275,000 submissions in the record of this
proceeding, including comments, reply comments, and ex parte
communications from consumers; broadband and voice providers and their
associations; public interest groups; academics; federal, state, and
local governmental entities; and others. We have listened and learned
from the record. In adopting final rules, we rely on that record and in
particular we look to the privacy and data security work done by the
Federal Trade Commission (FTC), as well as our own work adopting and
revising rules under section 222. We have also taken into account the
concepts that animate the Administration's Consumer Privacy Bill of
Rights (CPBR), and existing privacy and data security best practices.
5. The privacy framework we adopt today focuses on transparency,
choice,
[[Page 87275]]
and data security, and provides heightened protection for sensitive
customer information, consistent with customer expectations. In
adopting these rules we honor customer's privacy rights and implement
the statutory requirement that carriers protect the confidentiality of
customer proprietary information. These rules do not prohibit broadband
providers from using or sharing customer information, but rather are
designed to protect consumer choice while giving broadband providers
the flexibility they need to continue to innovate. By bolstering
customer confidence in broadband providers' treatment of confidential
customer information, we also promote the virtuous cycle of innovation
in which new uses of the network lead to increased end-user demand for
broadband, which drives network improvements, which in turn lead to
further innovative network uses, business growth, and innovation.
II. Executive Summary
6. Today we adopt rules protecting the privacy of broadband
customers. We also revise our current rules to harmonize our rules for
all telecommunications carriers. In this Order, we first offer some
background, explaining the need for these rules, and then discuss the
scope of the rules we adopt. In discussing the scope of the rules, we
define ``telecommunications carriers'' that are subject to our rules
and the ``customers'' those rules are designed to protect. We also
define the information protected under section 222 as customer
proprietary information (customer PI). We include within the definition
of customer PI three types of information collected by
telecommunications carriers through their provision of broadband or
other telecommunications services that are not mutually exclusive: (i)
Individually identifiable Customer Proprietary Network Information
(CPNI) as defined in section 222(h); (ii) personally identifiable
information (PII); and (iii) content of communications. We also adopt
and explain our multi-part approach to determining whether data has
been properly de-identified and is therefore not subject to the
customer choice regime we adopt for customer PI.
7. We next adopt rules protecting consumer privacy using the three
foundations of privacy--transparency, choice, and security:
8. Transparency. Recognizing the fundamental importance of
transparency to enable consumers to make informed purchasing decisions,
we require carriers to provide privacy notices that clearly and
accurately inform customers about what confidential information the
carriers collect, how they use it, under what circumstances they share
it, and the categories of entities with which they will share it. We
also require that carriers inform their customers about customers'
rights to opt in to or opt out (as the case may be) of the use or
sharing of their confidential information. We require that carriers
present their privacy notice to customers at the point of sale, and
that they make their privacy policies persistently available and easily
accessible on their Web sites, applications, and the functional
equivalents thereof. Finally, consistent with FTC best practices and
with the requirements in the CPBR, we require carriers to give their
customers advance notice of material changes to their privacy policies.
9. Choice. We find that because broadband providers are able to
view vast swathes of customer data, customers must be empowered to
decide how broadband providers may use and share their data. In this
section, we adopt rules that give customers of BIAS and other
telecommunications services the tools they need to make choices about
the use and sharing of customer PI, and to easily adjust those choices
over the course of time. Section 222 addresses the conditions under
which carriers may ``use, disclose, or permit access to'' customer
information. For simplicity throughout this document we sometimes use
the terms ``disclose'' or ``share'' in place of ``disclose or permit
access to.'' In adopting rules governing customer choice, we look to
the best practices framework recommended by the FTC in its 2012 Privacy
Report as well as the choice framework in the Administration's CPBR and
adopt a framework that provides heightened protections for sensitive
customer information. For purposes of the sensitivity-based customer
choice framework we adopt today, we find that sensitive customer PI
includes financial information, health information, Social Security
numbers, precise geo-location information, information pertaining to
children, content of communications, web browsing history, application
usage history, and the functional equivalents of web browsing history
or application usage history. With respect to voice services, we also
find that call detail information is sensitive information. We also
adopt a tiered approach to choice, by reference to consumer
expectations and context that recognizes three categories of approval
with respect to use of customer PI obtained by virtue of providing the
telecommunications service:
Opt-in Approval. We adopt rules requiring carriers to
obtain customers' opt-in approval for use and sharing of sensitive
customer PI (and for material retroactive changes to carriers' privacy
policies). A familiar example of opt-in practices appears when a mobile
application asks for permission to use geo-location information.
Opt-out Approval. Balancing important governmental
interests in protecting consumer privacy and the potential benefits
that may result from the use of non-sensitive customer PI, we adopt
rules requiring carriers to obtain customers' opt-out approval for the
use and sharing of non-sensitive customer PI.
Congressionally-Recognized Exceptions to Customer Approval
Requirements. Consistent with the statute, we adopt rules that always
allow broadband providers to use and share customer data in order to
provide broadband services (for example to ensure that a communication
destined for a particular person reaches that destination), and for
certain other purposes.
10. Data Security and Breach Notification. At its most fundamental,
the duty to protect the confidentiality of customer PI requires
telecommunications carriers to protect the customer PI they collect and
maintain. We encourage all carriers to consider data minimization
strategies and to embrace the principle of privacy by design. To the
extent carriers collect and maintain customer PI, we require BIAS
providers and other telecommunications carriers to take reasonable
measures to secure customer PI. To comply with this requirement, a
carrier must adopt security practices appropriately calibrated to the
nature and scope of its activities, the sensitivity of the underlying
data, the size of the provider, and technical feasibility. We decline
to mandate specific activities that carriers must undertake in order to
meet the reasonable data security requirement. We do, however, offer
guidance on the types of data security practices we recommend providers
strongly consider as they seek to comply with our data security
requirement, while recognizing that what constitutes ``reasonable''
data security evolves over time.
11. We also adopt data breach notification requirements. In order
to ensure that affected customers and the appropriate federal agencies
receive notice of data breaches that could result in harm, we adopt
rules requiring BIAS
[[Page 87276]]
providers and other telecommunications carriers to notify affected
customers, the Commission, and the FBI and Secret Service unless the
carrier is able to reasonably determine that a data breach poses no
reasonable risk of harm to the affected customers. In the interest of
expedient law enforcement response, such notice must be provided to the
Commission, the FBI, and Secret Service within seven business days of
when a carrier reasonably determines that a breach has occurred if the
breach impacts 5,000 or more customers; and must be provided to the
applicable federal agencies at least three days before notice to
customers. For breaches affecting fewer than 5,000 customers, carriers
must notify the Commission without unreasonable delay and no later than
thirty (30) calendar days following the carrier's reasonable
determination that a breach has occurred. In order to allow carriers
more time to determine the specifics of a data breach, carriers must
provide notice to affected customers without unreasonable delay, but
within no more than 30 days.
12. Particular Practices that Raise Privacy Concerns. Next, we find
that take-it-or-leave-it offerings of broadband service contingent on
surrendering privacy rights are contrary to the requirements of
sections 222 and 201 of the Act, and therefore prohibit that practice.
We also adopt heightened disclosure and affirmative consent
requirements for BIAS providers that offer customers financial
incentives, such as lower monthly rates, in exchange for the right to
use the customers' confidential information. Because the record
contains very little about financial incentive practices of voice
providers, this section of the Order is limited to BIAS providers.
13. Next we address several other issues raised in our rulemaking,
including dispute resolution; the request for an exemption for
enterprise customers of telecommunications services other than BIAS;
federal preemption; and the timeline for implementation.
14. Dispute Resolution. We reaffirm customers' right to use the
Commission's existing dispute resolution procedures and commit to
initiating a rulemaking on the use of mandatory arbitration
requirements in consumer contracts for broadband and other
communications services, acting on a notice of proposed rulemaking in
February 2017.
15. Exemption for Enterprise Customers of Telecommunications
Services other than BIAS. Recognizing that enterprise customers of
telecommunications services other than BIAS have different privacy
concerns and the capacity to protect their own interests, we find that
a carrier that contracts with an enterprise customer for
telecommunications services other than BIAS need not comply with the
privacy and data security rules we adopt today if the carrier's
contract with that customer specifically addresses the issues of
transparency, choice, data security, and data breach and provides a
mechanism for the customer to communicate with the carrier about
privacy and data security concerns. As with the existing, more limited
business customer exemption from our existing authentication rules,
carriers will continue to be subject to the statutory requirements of
section 222 even where this exemption applies.
16. Preemption. In this section, we adopt the proposal in the NPRM
and announce our intent to continue to preempt state privacy laws,
including data security and data breach laws, only to the extent that
they are inconsistent with any rules adopted by the Commission. This
limited application of our preemption authority is consistent with our
precedent in this area and with our long appreciation for the valuable
role the states play in protecting consumer privacy.
17. Implementation Timeline. The Order provides a timeline for
orderly transition to the new rules with additional time given for
small carriers to the extent that they may need to change their
practices.
18. Legal Authority. Finally, the Order closes by discussing our
legal authority to adopt the rules.
III. Establishing Baseline Privacy Protections for Customers of
Telecommunications Services
19. In this section, we adopt a set of rules designed to protect
the privacy of customers of BIAS and other telecommunications services.
The rules we adopt today find broad support in the record, and are
consistent with and build on existing regulatory and stakeholder-driven
frameworks, including the Commission's prior decisions and existing
section 222 rules, other federal privacy laws, state privacy laws, and
recognized best practices. The framework for our baseline privacy
protections focuses on providing transparency of carriers' privacy
practices; ensuring customers have meaningful choice about the use and
disclosure of their private information; and requiring carriers to
adopt robust data security practices for customer information. In this
section, we explain the rules we adopt to protect the privacy of
customers of BIAS and other telecommunications services.
A. Background and Need for the Rules
20. The Commission has a long history of protecting customer
privacy in the telecommunications sector. Section 705 of the
Communications Act, for example, is one of the most fundamental and
oldest sector-specific privacy requirements, and protects the privacy
of information carried by communications service providers. As early as
the 1960s the Commission began to wrestle with the privacy implications
of the use of communications networks to provide shared access to
computers and the sensitive, personal data they often contained.
Throughout the 1980s and 1990s, the Commission imposed limitations on
incumbent telephone companies' use and sharing of customer information.
21. Then, in 1996, Congress enacted Section 222 of the
Communications Act providing statutory protections to the privacy of
the data that all telecommunications carriers collect from their
customers. Congress recognized that telecommunications networks have
the ability to collect information from consumers who are merely using
networks as conduits to move information from one place to another
``without change in the form or content'' of the communications.
Specifically, Congress sought to ensure ``(1) the right of consumers to
know the specific information that is being collected about them; (2)
the right of consumers to have proper notice that such information is
being used for other purposes; and (3) the right of consumers to stop
the reuse or sale of that information.''
22. Section 222(a) imposes a duty on all telecommunications
carriers to protect the confidentiality of their customers'
``proprietary information,'' or PI. Section 222(c) imposes restrictions
on telecommunications carriers' use and sharing of customer proprietary
network information (CPNI) without customer approval, subject to
certain exceptions including as necessary to provide the
telecommunications service (or services necessary to or used in
providing that telecommunications service), and as otherwise provided
for by law. While we recognize, applaud, and encourage existing and
continued marketplace self-regulation and privacy innovations, Congress
has made clear that telecommunications carriers' privacy practices must
comply with the obligations imposed by section 222. We
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therefore reject arguments that we rely entirely on self-regulatory
mechanisms.
23. Over the last two decades, the Commission has promulgated,
revised, and enforced privacy rules for telecommunications carriers
that are focused on implementing the CPNI requirements of Section 222.
As practices have changed, the Commission has refined its section 222
rules. For example, after the emergence and growth of an industry made
possible by ``pretexting''--the practice of improperly accessing and
selling details of residential telephone calls--the Commission
strengthened its section 222 rules to add customer authentication and
data breach notification requirements. The current section 222 rules
focus on transparency, choice, data security, and data breach
notification.
24. Meanwhile, as consumer use of the Internet exploded, the FTC,
using its authority under section 5 of the FTC Act to prohibit ``unfair
or deceptive acts or practices in or affecting commerce,'' has entered
into a series of precedent-setting consent orders addressing privacy
practices on the Internet, held workshops and conferences, and issued
influential reports about privacy. Taken together, the FTC's privacy
work has focused on the importance of transparency; honoring consumers'
expectations about the use of their personal information and the
choices they have made about sharing that information; and the
obligation of companies that collect personal information to adopt
reasonable data security practices. Because common carriers subject to
the Communications Act are exempt from the FTC's section 5 authority,
the responsibility falls to this Commission to oversee their privacy
practices consistent with the Communications Act.
25. Last year the Administration proposed a Consumer Privacy Bill
of Rights. The goal of the CPBR is to ``establish baseline protections
for individual privacy in the commercial arena and to foster timely,
flexible implementations of these protections through enforceable codes
of conduct developed by diverse stakeholders.'' It recognizes that
Americans ``cherish privacy as an element of their individual
freedom,'' and that ``[p]reserving individuals' trust and confidence
that personal data will be protected appropriately, while supporting
flexibility and the free flow of information, will promote continued
innovation and economic growth in the networked economy.''
26. Prior to 2015, BIAS was classified as an information service,
which excluded such services from the ambit of Title II of the Act,
including section 222, and the Commission's CPNI rules. Instead,
broadband providers were subject to the FTC's unfair and deceptive acts
and practices authority. In the 2015 Open Internet Order, we
reclassified BIAS as a telecommunications service subject to Title II
of the Act, an action upheld by the D.C. Circuit in United States
Telecom Ass'n v. FCC. While we granted BIAS forbearance from many Title
II provisions, we concluded that application and enforcement of the
privacy protections in section 222 to BIAS is in the public interest
and necessary for the protection of consumers. However, we questioned
whether ``the Commission's current rules implementing section 222
necessarily would be well suited to broadband Internet access
service,'' and forbore from the application of these rules to broadband
service, ``pending the adoption of rules to govern broadband Internet
access service in a separate rulemaking proceeding.''
27. In March 2016, we adopted the Broadband Privacy NPRM, which
proposed a framework for applying the longstanding privacy requirements
of the Act to BIAS. In the NPRM, we proposed rules protecting customer
privacy using the three foundations of privacy--transparency, choice,
and security--and also sought comment on, among other things, whether
we should update rules that govern the application of section 222 to
traditional telephone service and interconnected VoIP service in order
to harmonize them with the results of this proceeding.
28. A number of broadband providers, their associations, as well as
some other commenters argue that because broadband providers are part
of a larger online eco-system that includes edge providers, they should
not be subject to a different set of regulations. These arguments
ignore the particular role of network providers and the context of the
consumer/BIAS provider relationship, and the sector specific privacy
statute that governs the use and sharing of information by providers of
telecommunications services. Based on our review of the record, we
reaffirm our earlier finding that a broadband provider ``sits at a
privileged place in the network, the bottleneck between the customer
and the rest of the Internet''--a position that we have referred to as
a gatekeeper. As such, BIAS providers can collect ``an unprecedented
breadth'' of electronic personal information.
29. We disagree with commenters that argue that BIAS providers'
insight into customer online activity is no greater than large edge
providers because customers' Internet activity is ``fractured'' between
devices, multiple Wi-Fi hotspots, and different providers at home and
at work. As commenters have explained, ``customers who hop between ISPs
on a daily basis often connect to the same networks routinely,'' and as
such, over time, ``each ISP can see a substantial amount of that user's
Internet traffic.''
30. While we recognize that there are other participants in the
Internet ecosystem that can also see and collect consumer data, the
record is clear that BIAS providers' gatekeeper position allows them to
see every packet that a consumer sends and receives over the Internet
while on the network, including, absent encryption, its contents. By
contrast, edge providers only see a slice of any given consumers
Internet traffic. As explained in the record, edge providers'
visibility into consumers' web browsing activity is necessarily
limited. According to the record, only three companies (Google,
Facebook, and Twitter) have third party tracking capabilities across
more than 10 percent of the top one million Web sites, and none of
those have access to more than approximately 25 percent of Web pages.
By ``third party tracking capability,'' we mean any method by which one
party injects a tracking mechanism into a customer's traffic in order
to monitor the customer's activity when the customer interacts with
other parties. Cookies are a common third party tracker, but there are
many other methods. In contrast, a BIAS provider sees 100 percent of a
customer's unencrypted Internet traffic.
31. At the same time, users have much more control over tracking by
web third parties than over tracking by BIAS providers. A range of
browser extensions are largely effective at blocking prominent third
parties, ``but these tools do nothing to stop data collection on the
wire.'' Further, Professor Nick Feamster explains that unlike other
Internet participants that see Domain Name System (DNS) lookups only to
their own domains (e.g., google.com, facebook.com, netflix.com), BIAS
providers can see DNS lookups every time a customer uses the service to
go to a new site.
32. Return Path explains additional unique data to which only BIAS
providers have access:
Many BIAS customers are assigned a dynamic (`changing') IP
address when they connect to their provider. In these cases, each
time a consumer's computer (or router) is rebooted, the ISP
dynamically assigns a new IP address to the networking device. While
the BIAS provider will have a record of
[[Page 87278]]
precisely which user was connected to an IP address at a specific
point in time, any third party will not, unless they subpoena the
BIAS provider for data.
Furthermore, as Mozilla explains, ``[b]ecause these are paid
services, [the broadband provider has] the subscriber's name, address,
phone number and billing history. The combination gives ISPs a very
unique, detailed and comprehensive view of their users that can be used
to profile them in ways that are commercially lucrative.''
33. We agree with commenters that point out that encryption can
significantly help protect the privacy of consumer content from BIAS
providers. However, even with encryption, by virtue of providing BIAS,
BIAS providers maintain access to a significant amount of private
information about their customers' online activity, including what Web
sites a customer has visited, how long and during what hours of the day
the customer visited various Web sites, the customer's location, and
what mobile device the customer used to access those Web sites.
Moreover, research shows that encrypted web traffic can be used to
infer the pages within an encrypted site that a customer visits, and
that the amount of data transmitted over encrypted connections can also
be used to infer the pages a customer visits.
34. The record also indicates that truly pervasive encryption on
the Internet is still a long way off, and that many sites still do not
encrypt. We observe that several commenters rely on projections that 70
percent of Internet traffic will be encrypted by the end of 2016.
However, a significant amount of this encrypted data is video traffic
from Netflix, which, according to commenters, accounts for 35 percent
of North American Internet traffic. Moreover, ``raw packets make for a
misleading metric.'' As further explained by one commenter ``watching
the full Ultra HD stream of The Amazing Spider-Man could generate more
than 40GB of traffic, while retrieving the WebMD page for `pancreatic
cancer' generates less than 2MB.'' What's more, research shows that
approximately 84 percent of health Web sites, 86 percent of shopping
Web sites, and 97 percent of news Web sites remain unencrypted. These
types of Web sites generate less Internet traffic but contain ``much
more personalized data.'' We encourage continued efforts to encrypt
personal information both in transit and at rest. At the same time, our
policy must account for the fact that encryption is not yet ubiquitous
and, in any event, does not preclude BIAS providers from having unique
access to customer data.
35. Thus, the record reflects that BIAS providers are not, in fact,
the same as edge providers in all relevant respects. In addition to
having access to all unencrypted traffic that passes between the user
and edge services while on the network, customers' relationships with
their broadband provider is different from those with various edge
providers, and their expectations concomitantly differ. For example,
customers generally pay a fee for their broadband service, and
therefore do not have reason to expect that their broadband service is
being subsidized by advertising revenues as they do with other Internet
ecosystem participants. In addition, consumers have a choice in
deciding each time whether to use--and thus reveal information--to an
edge provider, such as a social network or a search engine, whereas
that is not an option with respect to their BIAS provider when using
the service.
36. While some customers can switch BIAS providers, others do not
have the benefit of robust competition, particularly in the fixed
broadband market. Moreover, we have previously observed that
``[b]roadband providers have the ability to act as gatekeepers even in
the absence of `the sort of market concentration that would enable them
to impose substantial price increases on end users.' '' Their position
is strengthened by the high switching costs customers face when seeking
a new service, which could deter customers from changing BIAS providers
if they are unsatisfied the providers' privacy policies. Moreover, even
if a customer was willing to switch to a new broadband provider, the
record shows consumers often have limited options. We note, as stated
in the 2016 Broadband Progress Report, approximately 51 percent of
Americans still have only one option for a provider of fixed broadband
at speeds of 25 Mbps download/3 Mbps upload. Given all of these
factors, we conclude that, contrary to assertions in the record, BIAS
providers hold a unique position in the Internet ecosystem, and
disagree with commenters that assert that rules to protect the privacy
of broadband customers are unnecessary.
37. As discussed above and throughout this Order, our sector-
specific privacy rules are necessary to address the distinct
characteristics of telecommunications services. The record demonstrates
that strong customer privacy protections will encourage broadband usage
and, in turn investment. We further find that when consumers are
confident that their privacy is protected, they will be more likely to
adopt and use broadband services. As aptly explained by Mozilla,
``[t]he strength of the Web and its economy rests on a number of core
building blocks that make up its foundational DNA. When these building
blocks are threatened, the overall health and well-being of the Web are
put at risk. Privacy is one of these building blocks.'' The privacy
framework we adopt today will bolster consumer trust in the broadband
ecosystem, which is essential for business growth and innovation.
B. Scope of Privacy Protections Under Section 222
38. In adopting rules to protect the privacy of customers of BIAS
and other telecommunications services, we must begin by specifying the
entities and information at issue. We look to the language of the
statute to determine the appropriate scope of our implementing rules.
As discussed above, section 222(a) specifies that telecommunications
carriers have a duty to protect the confidentiality of proprietary
information of and relating to their customers, while section 222(c)
provides direction about protections to be accorded ``customer
proprietary network information.'' We therefore first adopt rules
identifying the set of ``telecommunications carriers'' that are subject
to our rules and define the ``customers'' these rules protect. Next we
define ``customer proprietary information'' and include within that
definition ``individually identifiable customer proprietary network
information,'' ``personally identifiable information,'' and content of
communications.
1. The Rules Apply to Telecommunications Carriers and Interconnected
VoIP Providers
39. For purposes of the rules we adopt today to implement section
222, we adopt a definition of ``telecommunications carrier'' that
includes all telecommunications carriers providing telecommunications
services subject to Title II, including broadband Internet access
service (BIAS). We also include interconnected VoIP services, which
have been covered since 2007. Although not limited to voice services,
our existing rules have been focused on voice services. When we
reclassified BIAS as a telecommunications service, we recognized that
our existing CPNI rules were not necessarily well suited to the
broadband context, and we therefore forbore from applying the existing
section 222 rules to BIAS. As part of this
[[Page 87279]]
rulemaking we have explored what privacy and data security rules we
should adopt for BIAS and whether we can harmonize our rules for voice
and BIAS. Throughout this Order we find that it is in the interests of
consumers and providers to harmonize our voice and broadband privacy
rules. We therefore adopt a single definition of telecommunications
carrier for purposes of these rules, and except as otherwise provided,
adopt harmonized rules governing the privacy and data security
practices of all such telecommunications carriers.
40. Because we adopt a single definition of telecommunications
carrier we need not change the definitions of ``telecommunications
carrier or carrier'' currently in our rules implementing section 222.
In accordance with these definitions, we continue to consider entities
providing interconnected VoIP service to be telecommunications carriers
for the purposes of these rules. The Commission has not classified
interconnected VoIP service as telecommunications service or
information service as those terms are defined in the Act, and we need
not and do not make such a determination today. We do amend the
definition of telecommunications service to conform to the definition
of telecommunications carrier. We also observe that because BIAS is now
a telecommunications service, BIAS providers are now telecommunications
carriers within the meaning of those rules. To remove any doubt as to
the scope of these rules, we define BIAS for purposes of our rules
pursuant to section 222 identically to our definition in the 2015 Open
Internet Order. We define ``broadband Internet access service
provider'' or ``BIAS provider'' to mean a person engaged in the
provision of BIAS. As used in the foregoing sentence and in the
definition of ``customer'' below, a ``person'' includes any individual,
group of individuals, corporation, partnership, association, unit of
government, or legal entity, however organized. Under the 2015 Open
Internet Order's definition of BIAS, the term BIAS provider does not
include ``premises operators--such as coffee shops, bookstores,
airlines, private end-user networks (e.g., libraries and universities),
and other businesses that acquire broadband Internet access service
from a broadband provider to enable patrons to access the Internet from
their respective establishments.'' Moreover, consistent with the 2015
Open Internet Order, our rules do not govern information that BIAS
providers obtain by virtue of providing other non-telecommunications
services, such as edge services that the BIAS provider may offer like
email, Web sites, cloud storage services, social media sites, music
streaming services, and video streaming services (to name a few).
2. The Rules Protect Customers' Confidential Information
41. Section 222 governs how telecommunications carriers treat the
``proprietary'' and ``proprietary network'' information of their
``customers.'' For purposes of the rules we adopt today implementing
section 222, we define ``customer'' as (1) a current or former
subscriber to a telecommunications service; or (2) an applicant for a
telecommunications service. We adopt a single definition of customer,
because we agree with those commenters that argue that harmonizing the
definition of ``customer'' for both BIAS and other telecommunications
services will ease consumer expectations, reduce confusion, and
streamline compliance costs for BIAS providers, especially small
providers. We also find that voice and BIAS customers face similar
issues related to the protection of their private information when they
apply for, subscribe to, and terminate their telecommunications
services.
42. In adopting this definition of customer, we find that BIAS
providers' and other telecommunications carriers' duty to protect
customer proprietary information under section 222 begins when a person
applies for service and continues after a subscriber terminates his or
her service. Our existing rules for voice services apply only to
current customers. We are, however, persuaded by commenters that argue
that the existing rule's limitation to current subscribers is too
narrow. As data storage costs decrease and computing power increases,
previous barriers to data analysis based on cost, time, or feasibility
are receding. BIAS providers and other telecommunications carriers have
the technical ability to retain and use applicant and customer
information long after the application process or termination of
service. If our rules do not protect applicants, consumers would lack
basic privacy protections when they share any confidential information
in order to apply for a telecommunications service. Similarly, current
customers would be penalized for switching providers given that the
``losing'' carrier would be free to stop protecting the confidentiality
of any private information it retains. These outcomes would run counter
to our firm commitment to promote broadband adoption, competition, and
innovation. Making this change is consistent with the 2014 Notice of
Apparent Liability issued in TerraCom, in which we explained that that
``the carrier/customer relationship commences when a consumer applies
for service.''
43. We disagree with commenters that assert that including
prospective and former customers within the definition of customer
could unduly burden providers. If carriers want to limit their
obligations with respect to applicants and former customers, they can
and should adopt data minimization practices and destroy applicants'
and former customers' confidential information as soon as practicable,
in a manner consistent with any other applicable legal obligations.
44. In addition, for purposes of these rules, we find it
appropriate to attribute all activity on a subscription to the
subscriber. We recognize that multiple people often use the BIAS or
voice services purchased by a single subscriber. For example,
residential fixed broadband and voice services often have a single
named account holder, but all household members and their guests may
use the Internet connection and voice service purchased by that
subscriber. Likewise, enterprise customers may have many users on the
same account. And, for mobile services, multiple users using separate
devices may share one account. However, treating each individual user
as a separate customer would be burdensome because the provider does
not have a separate relationship with each of those users, outside of
the relationship with the subscriber. To minimize burdens on both
providers and customers, we find it is reasonable to define
``customer'' to include users of the subscription (such as household
members and their guests), but treat the subscriber as the person with
authority to make privacy choices for all of the users of the service.
As such, we disagree with commenters who argue that every individual
using a BIAS subscription should qualify as a distinct customer with
separate privacy controls.
45. We recognize that some BIAS or voice subscriptions identify
multiple users. For example, some mobile BIAS providers offer group
plans in which each person has their own identified device, user ID,
and/or telephone number. If a BIAS or other telecommunications provider
is already treating each user as distinct and the subscriber authorizes
the other users to control their account settings, we encourage
carriers to give these users individualized privacy controls.
[[Page 87280]]
3. Scope of Customer Information Covered by These Rules
46. In this section, we define the scope of information covered by
the rules implementing section 222. Specifically, we import the
statutory definition of customer proprietary network information (CPNI)
into our implementing rules, and define customer proprietary
information (customer PI) as including individually identifiable CPNI,
personally identifiable information (PII), and content of
communications. We recognize that these categories are not mutually
exclusive, but taken together they identify the types of confidential
customer information BIAS providers and other telecommunications
carriers may collect or access in connection with their provision of
service. Below, we provide additional guidance on the scope of these
categories of customer information in the telecommunications context.
a. Customer Proprietary Network Information
47. Consistent with the preexisting voice rules, we adopt the
statutory definition of customer proprietary network information (CPNI)
for all telecommunications services, including BIAS. Since this is our
first opportunity to address this definition's application to BIAS, to
offer clarity we provide guidance on the meaning of CPNI as it applies
to BIAS. We focus on section 222(h)(1), which defines CPNI as
information that relates to the quantity, technical configuration,
type, destination, location, and amount of use of a telecommunications
service subscribed to by any customer of a telecommunications carrier,
and that is made available to the carrier by the customer solely by
virtue of the carrier-customer relationship; as well as information
contained in the bills pertaining to telephone exchange service or
telephone toll service received by a customer of a carrier, but does
not include subscriber list information. We agree with commenters that,
due to its explicit focus on telephone exchange and telephone toll
service, section 222(h)(1)(B) is not relevant to BIAS.
48. We interpret the phrase ``made available to the carrier by the
customer solely by virtue of the carrier-customer relationship'' in
section 222(h)(1)(A) to include any information falling within a CPNI
category that the BIAS provider collects or accesses in connection with
the provision of BIAS. This includes information that may also be
available to other entities. We disagree with commenters who propose
that the phrase ``made available to the carrier by the customer solely
by virtue of the carrier-customer relationship'' means that only
information that is uniquely available to the BIAS provider may satisfy
the definition of CPNI. These commenters contend that if a customer's
information is available to a third party, it cannot qualify as CPNI,
focusing on the term ``solely'' in the clause. However, the term
``solely'' modifies the phrase ``by virtue of,'' not the phrase ``made
available to the carrier.'' We therefore conclude that ``solely by
virtue of the carrier-customer relationship'' means that information
constitutes CPNI under section 222(h)(1)(A) if the provider acquires
the information as a product of the relationship and not through an
independent means. We note, for clarity, that both inbound and outbound
traffic are made available to the carrier by the customer solely by
virtue of the carrier-customer relationship. The directionality of the
traffic is irrelevant as to whether it satisfies the statutory
definition of CPNI.
49. We also agree with the Center for Democracy and Technology that
the fact that third-parties might gain access to the same data when a
consumer uses their services ``does not negate the fact that the BIAS
provider has gained access to the data only because the customer
elected to use the BIAS provider's telecommunications service.'' The
statute is silent as to whether such information might be available to
other parties, which indicates that Congress did not intend for the
definition of CPNI to hinge on such information being solely available
to the customers' carrier. Indeed, in the voice context, CPNI certainly
is available to other parties besides the customer's carrier and
section 222 protects that data. For example, when a customer calls
someone else, CPNI is also made available to the recipient's carrier
and intermediaries facilitating the completion of the call.
Furthermore, we find that commenters' narrow definition of CPNI is
inconsistent with the privacy-protective purpose of the statute. We
agree with some commenters' assertions that when a BIAS provider
acquires information wholly apart from the carrier-customer
relationship, such as purchasing public records from a third party,
that information is not CPNI.
50. However, consistent with the Commission's 2013 CPNI Declaratory
Ruling, we find that information that a BIAS provider causes to be
collected or stored on a customer's device, including customer premises
equipment (CPE) and mobile stations, also meets the statutory
definition of CPNI. The ``fact that CPNI is on a device and has not yet
been transmitted to the carrier's own servers also does not remove the
data from the definition of CPNI, if the collection has been done at
the carrier's direction.''
51. BIAS providers also have the ability, by virtue of the
customer-carrier relationship, to create and append CPNI to a
customer's Internet traffic. For example, if a carrier inserts a unique
identifier header (UIDH), that UIDH is CPNI because, as we will discuss
in greater detail below, it is information in the application layer
header that relates to the technical configuration, type, destination,
and amount of use of a telecommunications service.
52. We do not believe it is necessary to categorize all personally
identifiable information (PII) as CPNI, as suggested by Public
Knowledge. While we agree with Public Knowledge's sentiment that PII is
confidential information that deserves protection under the Act, and we
agree that some information is both PII and CPNI, we find that the Act
categorizes and protects all PII as proprietary information, under
section 222(a), as discussed below.
(i) Guidance Regarding Information That Meets the Statutory Definition
of CPNI in the Broadband Context
53. In keeping with the Commission's past practice, we decline to
set out a comprehensive list of data elements that do or do not satisfy
the statutory definition of CPNI in the broadband context. We agree
with commenters that ``no definition of CPNI should purport or aim to
be comprehensive and exhaustive, as technology changes quickly and
business models continually seek new ways to monetize and market user
data.'' In the past, the Commission has enumerated certain data
elements that it considers to be voice CPNI--including call detail
records (including caller and recipient phone numbers, and the
frequency, duration, and timing of calls) and any services purchased by
the customer, such as call waiting; these data continue to be voice
CPNI going forward. Similarly, we follow past practice and identify a
non-exhaustive list of the types of information that we consider to
constitute CPNI in the BIAS context. We find that such guidance will
help provide direction regarding the scope of providers' obligations
and help to increase customers' confidence in the security of their
confidential information as technology continues to advance. We find
that the following types of information relate to the quantity,
technical configuration, type, destination, location, and amount of use
of a telecommunications service
[[Page 87281]]
subscribed to by any customer of a telecommunications carrier, and as
such constitute CPNI when a BIAS provider acquires or accesses them in
connection with its provision of service:
Broadband Service Plans
Geo-location
MAC Addresses and Other Device Identifiers
IP Addresses and Domain Name Information
Traffic Statistics
Port Information
Application Header
Application Usage
Application Payload
Customer Premises Equipment and Device Information
54. We will first give a brief overview of the structure of
Internet communications, to help put these terms in context, and then
discuss why each of these types of information, and other related
components of Internet Protocol packets, qualify as CPNI.
(a) Background--Components of an Internet Protocol Packet
55. The layered architecture of Internet communications informs our
analysis of CPNI in the broadband context. While the concept of
layering is not unique to the Internet, layering plays a uniquely
prominent role for Internet-based communications and devices. For that
reason, we begin with a brief technical overview of the layered
structure of Internet communications.
56. Multiple layers--often represented as a vertical stack--
comprise every Internet communication. Each layer in the stack serves a
particular logical function and uses a network protocol that
standardizes communication between systems, enabling rapid innovation
in Internet-based protocols and applications. Within one device,
information is typically transmitted vertically through the various
layers. Across all devices, equivalent layers perform the equivalent
functions. This compatibility and interoperability is typically
represented as horizontal relationships. When an application sends data
over the Internet, the process begins with application data moving
downwards through the layers. Each layer adds additional networking
information and functionality, wrapping the output of the layers above
it with a ``header.'' The communication sent out over the Internet--
consisting of the application data wrapped in headers from each layer--
is called a ``packet.'' When a device receives data over the Internet,
the reverse process occurs. Data moves upwards through the layers; each
layer unwraps its associated information and passes the output upward,
until the application on the recipient's device recovers the original
application data. As a component of their provision of service, BIAS
providers may analyze each of these layers for reasonable network
management.
57. Common representations of the Internet's architecture range
from four to seven layers. To highlight design properties relevant to
the broadband CPNI analysis, we describe a five-layer model in this
explanation. From top to bottom, the layers are: Application payload,
application header, transport, network, and link. We will briefly
describe each of the five layers, from top to bottom:
58. Application Payload. The information transmitted to and from
each application a customer runs is commonly referred to as the
application layer payload. The application payload is the substance of
the communication between the customer and the entity with which she is
communicating. Examples of application payloads include the body of a
Web page, the text of an email or instant message, the video served by
a streaming service, the audiovisual stream in a video chat, or the
maps served by a turn-by-turn navigation app.
59. Application Header. The application will usually append one or
more headers to the payload; these headers contain information about
the application payload that the application is sending or requesting.
For example, in web browsing, the Uniform Resource Locator (URL) of a
Web page constitutes application header information. In a conversation
via email, instant message, or video chat, an application header may
disclose the parties to the conversation.
60. Transport Layer. Below the application header layer is the
transport layer, which forwards data to the intended application on
each device and can manage the flow of communications from one device
to another device. Two transport protocols are widely deployed on the
Internet: the Transmission Control Protocol (TCP), which ensures that
data arrives intact, and the User Datagram Protocol (UDP), which
provides fewer guarantees about data integrity. Port numbers are an
example of data within the transport layer header; a port number
specifies which application on a device should handle a network
communication.
61. Network Layer. The network layer is below the transport layer,
and contains information used to route packets across the Internet from
one device to another device. Almost all Internet traffic uses the
Internet Protocol (IP) at the network layer. IP addresses are the most
common example of data at the network layer; an IP address in a network
header indicates the sender or recipient of an Internet packet.
62. Link Layer. The final layer is the link layer, which is below
the network layer. Link layer protocols route data between devices on
the same local network. For example, devices on the same wired or
wireless network can usually communicate directly with each other at
the link layer. MAC addresses are an example of data at the link layer,
and a wide range of link technologies (Ethernet, DOCSIS, Wi-Fi, and
Bluetooth, among others) use them. A MAC address functions as a
globally unique device identifier, ensuring that every device on a
local network has a distinct address for sending and receiving data.
(b) Specific Examples of CPNI in the BIAS Context
63. With this understanding of the architecture of Internet
communications, we can now examine how the components of an IP data
packet map to the statutory definition of CPNI. In this section, we
provide guidance on what data elements constitute CPNI; this is
distinct from the question of whether a data element constitutes
individually identifiable CPNI and is thus ``customer proprietary
information.'' Below, we provide guidance addressing how various data
elements constitute CPNI under section 222.
64. Broadband Service Plans. We find that broadband service plans
meet the statutory definition of CPNI in the broadband context because
they relate to the quantity, type, amount of use, location, and
technical configuration of a telecommunications service. We agree with
NTCA that ``information related to a customer's broadband service plan
can be viewed as analogous to voice telephony service plans,'' which
the Commission has long considered to be CPNI in the voice context.
These plans detail subscription information, including the type of
service (e.g., fixed or mobile; cable or fiber; prepaid or term
contract), speed, pricing, and capacity (e.g., data caps). These data
relate to the ``type'' of telecommunications service to which the
customer subscribes, as well as how the BIAS provider will adjust the
``technical configuration'' of their network to serve that customer.
Information pertaining to subscribed capacity and speed relate to the
``quantity'' of services the customer purchases, as well as the
``amount'' of services the customer consumes. Service plans often
include the customer's
[[Page 87282]]
address (for billing purposes or to identify the address of service),
which relates to the location of use of the service.
65. Geo-location. Geo-location is information related to the
physical or geographical location of a customer or the customer's
device(s), regardless of the particular technological method used to
obtain this information. Providers often need to know where their
customers are so that they can route communications to the proper
network endpoints. The Commission has already held that geo-location is
CPNI, and Congress emphasized the importance of geo-location data by
adding Section 222(f).
66. We disagree with commenters who ask us to draw technology-based
distinctions for what types of location information are sufficiently
precise to qualify as geo-location CPNI. BIAS providers can use many
types of data--either individually or in combination--to locate a
customer, including but not limited to GPS, address of service, nearby
Wi-Fi networks, nearby cell towers, and radio-frequency beacons. We
caution that these and other forms of location information in place now
or developed in the future constitute geo-location CPNI when made
available to the BIAS provider solely by virtue of the carrier-customer
relationship.
67. Media Access Control (MAC) Addresses and Other Device
Identifiers. We conclude that device identifiers, such as MAC
addresses, are CPNI in the broadband context because they relate to the
technical configuration and destination of use of a telecommunications
service. Link layer protocol headers convey MAC addresses, along with
other link layer protocol information. A MAC address uniquely
identifies the network interface on a device, and thus uniquely
identifies the device itself (including the device manufacturer and
often the model). MAC addresses relate to the technical configuration
and destination of communications because BIAS providers use them to
manage their networks and route data packets to the appropriate network
device. We disagree with Sandvine, which argues that link layer
information such as MAC addresses do not relate to the technical
configuration of network traffic or the destination of packets. For the
same reasons, we conclude that other device identifiers and other
information in link layer protocol headers are CPNI in the broadband
context because they relate to the technical configuration and
destination of use of a telecommunications service.
68. Internet Protocol (IP) Addresses and Domain Name Information.
We conclude that source and destination IP addresses constitute CPNI in
the broadband context because they relate to the destination, technical
configuration, and/or location of a telecommunications service. An IP
address is a routable address for each device on an IP network, and
BIAS providers use the end user's and edge provider's IP addresses to
route data traffic between them. As such, source and destination IP
addresses are roughly analogous to telephone numbers in the voice
telephony context. The Commission has previously held telephone numbers
dialed to be CPNI. Further, our CPNI rules for TRS providers recognize
IP addresses as call data information. By this analogy, we mean only
that both are ``roughly similar numerical identifiers'' used to route
telecommunications. We do not intend to imply that IP addresses are or
should be administered in the same manner as telephone numbers. This
definitional change to our regulations in no way asserts Commission
jurisdiction over the assignment or management of IP addressing.
69. We agree with those commenters that argue that the IP addresses
a customer uses and those with which she exchanges packets constitute
CPNI because both source and destination IP addresses relate to the
destination of use of a telecommunications service; one links to the
destination for inbound traffic while the other links to the
destination for outbound traffic. IP addresses are also frequently used
in geo-location. A BIAS provider is uniquely capable of geo-locating an
IP address. Most notably, in the case of mobile broadband Internet
access service, the provider knows the geo-location of the cell towers
to which the customer's device connects and can use this to determine
the customer's device location. As Public Knowledge explains, ``IP
addresses can easily be mapped to geographic locations, meaning that
both the subscriber and the service can be located.'' IP addresses
relate to technical configuration because BIAS providers configure
their systems to use IP addresses in the network layer to communicate
data packets between senders and receivers.
70. We disagree with commenters who argue that a customer's IP
address is not CPNI. Some commenters argue that a customer's IP address
is not CPNI because the BIAS provider assigns the IP address to the
customer, and thus it is not ``made available to the carrier by the
customer solely by virtue of the carrier-customer relationship.'' This
reading of the text undermines the privacy-protective purpose of the
statute. First, as the Commission has previously held, information that
the provider causes to be generated by a customer's device or appended
to a customer's traffic, in order to allow the provider to collect,
access, or use that information, can qualify as CPNI if it falls within
one of the statutory categories. Second, while the provider generates
and assigns the number that will become the customer's IP address, that
number is ultimately just a proxy for the customer, translated into a
language that Internet Protocol understands. But for the carrier-
customer relationship, the customer would not have an IP address. Other
commenters argue that IP addresses should not qualify as CPNI because
``this information is necessarily sent onto the open Internet in order
to make the service work.'' However, as discussed above, whether
information is available to third parties does not affect whether it
meets the statutory definition of CPNI.
71. We also disagree with commenters who assert that dynamic IP
addresses do not meet the statutory definition of CPNI. A dynamic IP
address is one that the BIAS provider can change. As Return Path
explains, ``[w]hile the BIAS provider will have a record of precisely
which user was connected to [a dynamic] IP address at a specific point
in time, any third party will not.'' A dynamic IP address may be used
for a shorter period of time than a static IP address. We note that
these potential privacy benefits of dynamic IP addresses depend upon
the specific network configuration and practices of the BIAS provider.
For example, a provider may assign a dynamic IP address to a customer
for a long period of time, such that it is effectively equivalent to a
static IP address. In certain configurations (e.g., IPv6 without
privacy extensions), a dynamic IP address can be more revealing than a
static IP address, because it includes other network identifiers (such
as a MAC address). But a dynamic IP address still meets the statutory
definition of CPNI because it relates to the technical configuration,
type, destination, and/or location of use of a telecommunications
service, for the reasons discussed above.
72. We also conclude that information about the domain names
visited by a customer constitute CPNI in the broadband context. Domain
names (e.g., ``fcc.gov'') are common monikers that the customer uses to
identify the end point to which they seek to connect. Whether or not
the customer uses the
[[Page 87283]]
BIAS provider's in-house DNS lookup service is irrelevant to whether
domain names satisfy the statutory definition of CPNI. Domain names
also translate directly into IP addresses. Because of this easy
translation, domain names relate to the destination and technical
configuration of a telecommunications service.
73. As discussed above, Internet traffic is communicated through a
layered architecture, including a network layer that uses protocol
headers containing IP addresses to route communications to the intended
devices. Similar to IP addresses, other information in the network
layer protocol headers is CPNI in the broadband context. BIAS providers
configure their networks to use this information for routing, network
management, and security purposes. These headers will also indicate the
total size of the packet. As such, other information in the network
layer protocol headers relates to the technical configuration and
amount of use of a telecommunications service.
74. Traffic Statistics. We conclude that traffic statistics meet
the statutory definition of CPNI in the broadband context because they
relate to the amount of use, destination, and type of a
telecommunications service. We use the technology-neutral term
``traffic statistics'' to encompass any quantification of the
communications traffic, including short-term measurements (e.g., packet
sizes and spacing) and long-term measurements (e.g., monthly data
consumption, average speed, or frequency of contact with particular
domains and IP addresses). There are many common forms of traffic
statistics, such as IPFIX, and we believe it is important to focus on
how BIAS providers use these data, rather than single out particular
technologies. We believe that traffic statistics are analogous to call
detail information regarding the ``duration[] and timing of [phone]
calls'' and aggregate minutes used in the voice telephony context, both
of which are CPNI. BIAS providers use traffic statistics to optimize
the efficiency of their networks and protect against cyber threats, but
can also use this data to draw inferences that implicate the amount of
use, destination, and type of a telecommunications service. For
example, BIAS providers can use traffic statistics to determine the
amount of use (e.g., date, time, and duration), and to identify
patterns such as when the customer is at home, at work, or elsewhere,
or reveal other highly personal information. Traffic statistics related
to browsing history and other usage can reveal the ``destination'' of
customer communications. Further, a BIAS provider could deduce the
``type'' of application (e.g., VoIP or web browsing) that a customer is
using based on traffic patterns, and thus the purpose of the
communication.
75. Port Information. We conclude that port information is CPNI in
the broadband context because it relates to the destination, type, and
technical configuration, of a telecommunications service. A port is a
logical endpoint of communication with the sender or receiver's
application, and consequently relates to the ``destination'' of a
communication. The transport layer protocol header of a data packet
contains the destination port number, which determines which
application receives the communication. Port destinations are analogous
to telephone extensions in the voice context. Port numbers identify or
at least provide a strong indication of the type of application used,
and thus the purpose of the communication, such as email, web browsing,
or other activities. Though sometimes port numbers may not reveal
anything of significance, they often do, and therefore we conclude that
they relate to the destination, type, or technical configuration of the
service. BIAS providers configure their networks using port information
for network management purposes, such as to block certain ports to
ensure network security. As such, these practices relate to the
``technical configuration'' of the telecommunications service. We agree
with commenters that other transport layer protocol header information
is CPNI in the broadband context because it relates to the technical
configuration and amount of use of a telecommunications service. BIAS
providers use other header information in this layer to configure their
networks and monitor for security threats. For example, because UDP
headers indicate packet size, they can reveal the amount of data the
customer is consuming, and because TCP headers include sequence
numbers, they can reveal information about a customer's device
configuration.
76. Application Header. We conclude that application header
information is CPNI in the broadband context because it relates to the
destination, type, technical configuration, and amount of use of a
telecommunications service. As discussed above, the top-most layer of
network architecture is the application layer; IP data packets contain
application headers to instruct the recipient application on how to
process the communication. Application headers contain data for
application-specific protocols to help request and convey application-
specific content. Application headers are analogous in the voice
telephony context to a customer's choices within telephone menus used
to route calls within an organization (e.g., ``Push 1 for sales. Push 2
for billing.''). The application header communicates information
between the application on the end user's device and the corresponding
application at the other endpoint of the communication. For example,
application headers for web browsing typically use the Hypertext
Transfer Protocol (HTTP) and contain the Uniform Record Locator (URL),
operating system, and web browser; application headers for email
typically contain the source and destination email addresses.
Application headers may also include information relating to persistent
identifiers, use of encryption, and virtual private networks (VPNs).
Email headers may also include the subject line. The type of
applications used, the URLs requested, and the email destination all
convey information intended for use by the edge provider to render its
service. Application headers can also reveal information about the
amount of data being conveyed in the packet. BIAS providers may
configure their networks using application headers for network
management or security purposes.
77. Consistent with our decision in the 2013 CPNI Declaratory
Ruling, we agree with commenters that any information that the BIAS
provider injects into the application header, such as a unique
identifier header (UIDH), is also CPNI in the broadband context. BIAS
providers sometimes append information to application headers, in
particular HTTP headers, in order to uniquely tag communications with a
specific subscriber account. Like other application header information,
these data relate to the technical configuration, type, destination,
and amount of use of a telecommunications service.
78. Application Usage. We conclude that information detailing the
customer's use of applications is CPNI in the broadband context because
it relates to the type and destination of a telecommunications service.
Unlike an application payload, which contains the substance of a
communication in an IP packet, application usage information is data
that reveals the customer's use of an application more generally. A
BIAS provider often collects application usage information through its
provision of service. Sometimes application usage information is
quantified--similar to traffic statistics--into short-term or long-term
measurements. Such
[[Page 87284]]
information can reveal the type of applications the customer uses and
with whom she communicates. As such, to the extent that the BIAS
provider directs the collection or storage of such information, we
conclude that it is CPNI. For the reasons discussed above, we disagree
with commenters who contend that we should not consider such
information to be CPNI because it is also available to other parties.
79. Application Payload. We conclude that the application payload,
which is the part of the IP packet containing the substance of the
communication between the customer and entity with which the customer
is communicating, can be considered CPNI. Examples of application
payloads include the body of a Web page, the text of an email or
instant message, the video shared by a streaming service, the
audiovisual stream in a video chat, or the maps served by a ride-
sharing app. It is available to the carrier only because of the
customer-carrier relationship and can relate to technical
configuration, type, destination and amount of the use of the
telecommunications service. BIAS providers are technically capable of
configuring their networks to scan all parts of the data packet,
including the payload, to detect security threats and block malicious
packets. BIAS providers also use various network management techniques
to minimize network congestion while transmitting application payloads.
The application payload can help identify the parties to the
communication (e.g., the online streaming video distributor of a
streaming video, or the homepage of a news Web site), and thus the
communication's destination. The payload's size and substance can also
indicate the amount of data the customer is using, the type of
communication, and the duration of the use of the service. Another way
to think of the application payload is as the ``content of the
communication.'' Because of the importance given to protecting content
of communications in our legal system, we also discuss content
separately as its own element of customer proprietary information.
80. Customer Premises Equipment (CPE) and other Customer Device
Information. Information pertaining to customer premises equipment
(CPE) and other customer device information, such as that relating to
mobile stations, is CPNI in the broadband context because it relates to
the technical configuration, type, and destination of a
telecommunications service. The Act defines CPE as ``equipment employed
on the premises of a person (other than a carrier) to originate, route,
or terminate telecommunications.'' The Commission has long-understood
CPE to include customers' mobile devices, such as cell phones. Given
this precedent, we believe that other consumer devices capable of being
connected to broadband services, such as smartphones and tablets, also
fall under the rubric of CPE, along with more traditional CPE such as a
customer's computer, modem, router, videophone, or IP caption phone.
However, we also observe that such devices would be considered ``mobile
stations,'' which the Act defines as ``a radio-communication station
capable of being moved and which ordinarily does move.'' We disagree
with commenters that argue that only devices furnished by the BIAS
provider can qualify as CPE; there is no such limitation in the
statutory language.
81. We find that the traits of CPE and other customer devices
(e.g., model, operating system, software, and/or settings) a customer
uses relates to the technical configuration and communications
protocols the BIAS provider uses to interface that device with its
network, as well as the type of service to which the customer
subscribes (e.g., fixed or mobile, cable or fiber). CPE and mobile
station information relates to the destination of the use of BIAS
because it can identify the endpoint for inbound communications.
82. We disagree with commenters who argue that we should not
consider CPE and by extension other customer device information to be
CPNI because CPE and other customer devices are also used for purposes
other than BIAS, or because such information may be available to other
parties. As discussed above, what matters is the nature of the
information made available to the BIAS provider through its provision
of service.
83. We disagree with NTCA, which misinterprets the Bureau-level
1998 CPNI Clarification Order to argue that the Commission has
previously found that CPE is not covered by section 222. In the 1998
CPNI Clarification Order, the Bureau addressed the issue of ``customer
information independently derived from the carrier's prior sale of CPE
to the customer or the customer's subscription to a particular
information service offered by the carrier in its marketing of new
CPE[.]'' By contrast, here we are addressing information about the CPE
itself that is made available to the carrier by the customer solely by
virtue of the carrier-customer relationship, i.e., information derived
in the course of providing BIAS or another telecommunications service.
84. Other Types of CPNI. We reiterate that the examples of CPNI
discussed above are illustrative, not exhaustive. To the extent that
other types of information satisfy the statutory definition of CPNI,
those data may also be CPNI, either in the BIAS context or in the
context of other telecommunications services.
b. Customer Proprietary Information (Customer PI)
85. Section 222(a) imposes a general duty on all telecommunications
carriers ``to protect the confidentiality of proprietary information
of, and relating to, . . . customers.'' ``[P]roprietary information of,
and relating to, . . . customers'' is information that BIAS providers
and other telecommunications carriers acquire in connection with their
provision of service, which customers have an interest in protecting
from disclosure. We call this information ``customer proprietary
information'' or ``customer PI.'' Customer PI consists of three non-
mutually-exclusive categories: (1) Individually identifiable customer
proprietary network information (CPNI), (2) personally identifiable
information (PII), and (3) content of communications. This
interpretation of section 222(a) is consistent with other provisions of
the Communications Act that use the term ``proprietary information,''
and with the Commission's use of that term before enactment of Section
222. As we discuss in more detail below, protecting PII and content is
at the heart of most privacy regimes and we recognized in TerraCom that
the Communications Act protects them as customer PI because it
``clearly encompasses private information that customers have an
interest in protecting from public exposure.''
86. As we previously explained, ``[i]n the context of section 222,
it is clear that Congress used the term `proprietary information'
broadly to encompass all types of information that should not be
exposed widely to the public, whether because that information is
sensitive for economic reasons or for reasons of personal privacy. We
reaffirm our conclusion that `proprietary information' in section
222(a), as applied to customers . . . clearly encompass[es] private
information that customers have an interest in protecting from public
exposure.'' As such, we disagree with commenters that argue that the
word ``proprietary'' in section 222(a) means the statute only protects
information the customer keeps secret from any other party. If only
secret information qualified as private information, then not even
Social Security numbers would be
[[Page 87285]]
``proprietary'' and subject to the protections of section 222 and our
implementing rules. People regularly give their Social Security numbers
to banks, doctors, utility companies, telecommunications carriers,
employers, schools, and other parties in order to obtain various
services--but this does not mean the information is not ``proprietary''
to them. To define ``proprietary'' as these commenters propose would
render section 222(a) at worst meaningless and at best leaving a gap
whereby sensitive proprietary information like a Social Security number
would be unprotected.
87. We disagree with commenters that assert that defining the
category of customer PI in this way would dramatically expand the scope
of providers' duties to protect private customer information. Based on
the record before us, we find that BIAS providers--like other
telecommunications carriers--are already on notice that they have a
duty to keep such information secure and confidential based on, among
other things, FTC guidance that applied to them prior to the
reclassification of broadband in the 2015 Open Internet Order.
According to FTC staff, ``[t]o date, the FTC has brought over 500 cases
protecting the privacy and security of consumer information.'' We have
held providers responsible for protecting these private data under
section 222(a). In TerraCom, we also found that the failure to protect
customer's private information was an unjust and unreasonable practice
under section 201(b). Likewise, providers have been required to protect
the content of communications for decades. Moreover, customers
reasonably expect and want their providers to keep these data secure
and confidential. Surveys reflect that 74 percent of Americans believe
it is ``very important'' to be in control over their own information;
as a Pew study found, ``[i]f the traditional American view of privacy
is the `right to be left alone,' the 21st-century refinement of that
idea is the right to control their identity and information.'' We agree
with the Center for Democracy & Technology that ``[e]xcluding PII from
the proposed rules would be contrary to decades of U.S. privacy
regulation and public policy.'' We also observe that omitting PII from
the scope of these rules would result in a gap in protection for PII
under the Act's primary privacy regime for telecommunications services.
Thus, were PII not included within the scope of customer PI, sensitive
PII like Social Security numbers or private medical records would
receive fewer protections than a broadband plan's monthly data
allowance, a result we do not think intended by Congress. We discuss
and define PII below.
c. Personally Identifiable Information (PII)
88. Protecting personally identifiable information is at the heart
of most privacy regimes. Historically, legal definitions of PII have
varied. Some incorporated checklists of specific types of information;
others deferred to auditing controls. Privacy protections must evolve
and improve as technology--and our understanding of its potential--
evolves and improves. Our definition incorporates this modern
understanding of data privacy and tracks the FTC, the Administration's
proposed CPBR, and National Institute of Standards and Technology
(NIST) guidelines on PII.
89. We define personally identifiable information, or PII, as any
information that is linked or reasonably linkable to an individual or
device. Information is linked or reasonably linkable to an individual
or device if it can reasonably be used on its own, in context, or in
combination to identify an individual or device, or to logically
associate with other information about a specific individual or device.
The ``linked or reasonably linkable'' standard for determining the
metes and bounds of personally identifiable information is well
established and finds strong support in the record. In addition to
NIST, CPBR, and the FTC, the Department of Education, the Securities
and Exchange Commission, the Department of Defense, the Department of
Homeland Security, the Department of Health and Human Services, and the
Office of Management and Budget all use a version of this standard in
their regulations and policies.
90. We agree with the FTC staff that ``[w]hile almost any piece of
data could be linked to a consumer, it is appropriate to consider
whether such a link is practical or likely in light of current
technology.'' While we recognize that `` `[i]dentifiable' information
is increasingly contextual''--especially when a provider can cross-
reference multiple types and sources of information--anchoring the
standard to a mere ``possibility of logical association'' could result
in ``an overly-expansive definition.'' Thus, we adopt the
recommendation of the FTC staff and others to add the term
``reasonably'' to our proposed ``linked or linkable'' definition of
PII. This conclusion has broad support in the record.
91. We also adopt the FTC staff recommendation that PII should
include information that is linked or reasonably linkable to a customer
device. As discussed above, devices in the BIAS context include a
customer's smartphone, tablet, computer, modem, router, videophone, IP
caption phone, and other consumer devices capable of connecting to
broadband services. We agree with the FTC staff that ``[a]s consumer
devices become more personal and associated with individual users, the
distinction between a device and its user continues to blur.'' The
Digital Advertising Alliance likewise recognizes the connection between
individuals and devices, stating in its guidance that information
``connected to or associated with a particular computer or device'' is
identifiable. While some commenters argue that we should not include
information linkable to a device in the definition of PII, we find that
such identifiers are often and easily linkable to an individual, as we
discussed above.
92. We disagree with commenters that argue that PII should only
include information that is sensitive or capable of causing harm if
disclosed. The ability of information to identify an individual defines
the scope of PII. Whether or not any particular PII is sensitive or
capable of causing harm if disclosed is a separate question from the
definitional question of identifiability. We address the treatment of
sensitive versus non-sensitive information below.
93. We agree with commenters that we should offer illustrative,
non-exhaustive examples of PII. We have analyzed descriptions of PII in
the record, our prior orders, NIST, the FTC, the Administration's
proposed CPBR, and other federal and state statutes and regulations. We
find that examples of PII include, but are not limited to: Name; Social
Security number; date of birth; mother's maiden name; government-issued
identifiers (e.g., driver's license number); physical address; email
address or other online contact information; phone numbers; MAC
addresses or other unique device identifiers; IP addresses; and
persistent online or unique advertising identifiers. Several of these
data elements may also be CPNI. OTI asks us to clarify the meaning of
``other online contact information.'' The term is meant to be
technology neutral and encompass other methods of BIAS-enabled direct
messaging.
94. We disagree with commenters that argue that we should not
consider MAC addresses, IP addresses, or device identifiers to be PII.
First, as discussed above, a customer's IP address and MAC
[[Page 87286]]
address each identify a discrete customer and/or customer device by
routing communications to a specific endpoint linked to the customer.
Information does not need to reveal an individual's name to be linked
or reasonably linkable to that person. A unique number designating a
discrete individual--such as a Social Security number or persistent
identifier--is at least as specific as a name. In many cases, a unique
numerical identifier will be more specific than the person's actual
name. Second, MAC addresses, IP addresses, and other examples of PII do
not need to be able to identify an individual in a vacuum to be linked
or reasonably linkable. BIAS providers can combine this information
with other information to identify an individual (e.g., the BIAS
provider's records of which IP addresses were assigned to which
customers, or traffic statistics linking MAC addresses with other
data). In situations where the BIAS provider sold or leased a device to
a customer--such as a smartphone, modem, or router--the provider could
associate device identifiers with the customer from its records. As the
Supreme Court has observed, ``[w]hat may seem trivial to the
uninformed, may appear of great moment to one who has a broad view of
the scene and may put the questioned item of information in its proper
context.''
95. Customer Contact Information--Names, Addresses, and Phone
Numbers of Individuals. Names, addresses, telephone numbers, and other
information that is used to contact an individual are classic PII
because they are linked or reasonably linkable to an individual or
device. Some commenters argue that contact information is not protected
under section 222 because ``Subscriber list information'' is exempt
from the choice requirements for CPNI under section 222(e). However,
subscriber list information, a relatively small subset of customer
contact information, was subject to other considerations at the time of
enactment.
96. Subscriber list information is defined in the statute as ``any
information (A) identifying the listed names of subscribers of a
carrier and such subscribers' telephone numbers, addresses, or primary
advertising classifications (as such classifications are assigned at
the time of the establishment of such service), or any combination of
such listed names, numbers, addresses, or classifications; and (B) that
the carrier or an affiliate has published, caused to be published, or
accepted for publication in any directory format.'' Through this
definition, Congress recognized that a dispositive factor is whether
the information has been published or accepted for publication in a
directory format.
97. The legislative history shows that Congress created a narrow
carve out from the definition of CPNI for subscriber list information
in order to protect the longstanding practice of publishing telephone
books and to promote competition in telephone book publishing. The
legislative history is clear that Congress did not intend for
subscriber list information ``to include any information identifying
subscribers that is prepared or distributed within a company or between
affiliates or that is provided to any person in a non-public manner.''
Instead, Congress intended subscriber list information to be ``data
that local exchange carriers traditionally and routinely make public.
Subscribers have little expectation of privacy in this information
because, by agreeing to be listed, they have declined the opportunity
to limit its disclosure.'' Based on this legislative history, we find
that the phrase ``published, caused to be published, or accepted for
publication in any directory format'' is best read as limited to
publicly available telephone books of the type that were published when
Congress enacted the statute, or their direct equivalent in another
medium, such as a Web site republishing the contents of a publicly
available telephone book.
98. Unlike landline voice carriers, neither mobile voice carriers
nor broadband providers publish publicly-available directories of
customer information. Nor does the record reflect more than speculation
about any future interest in publishing directories. Because publishing
of broadband customer directories is neither a common nor a long-
standing practice, we find that broadband customers have no expectation
that that they are consenting to the public release of their name,
postal address, or telephone number when they subscribe to BIAS. We
therefore conclude that a directory of BIAS customers' names,
addresses, and phone numbers would not constitute information published
in a ``directory format'' within the meaning of the statute, and
therefore there is no ``subscriber list information'' in the broadband
context. As such, we disagree with commenters who ask us to ignore the
publication requirement in order to exempt names, addresses, telephone
numbers, and IP addresses from these rules.
99. We recognize that the Commission has previously found that
names, addresses, and telephone numbers are not CPNI, even when not
published as subscriber list information. However, the Commission has
not analyzed whether such customer contact information is PII, and
therefore subject to protections under section 222(a). As discussed
above, we make clear today that it is PII. As PII, this information is
subject to our customer choice rules, discussed in detail below. Our
customer choice rules will continue to allow this information to be
used to publish publicly available telephone directories, consistent
with the current practice of allowing customers to keep their
information unlisted.
100. Harmonization. We agree with the American Cable Association
and various small providers who urge us to harmonize our BIAS and voice
definitions under Section 222. Having one uniform set of definitions
will simplify compliance and reduce consumer confusion. This is
especially true for small providers who collect less customer
information, use it for narrower purposes, and do not have the
resources to maintain a bifurcated system. Consequently, we extend this
definition of PII to all section 222 contexts.
d. Content of Communications
101. We find that the Act protects the content of communications as
customer PI. Content is a quintessential example of a type of
``information that should not be exposed widely to the public . . .
[and] that customers expect their carriers to keep private.'' Content
is highly individualistic, private, and sensitive. Except in limited
circumstances where savvy customers deploy protective tools, BIAS
providers often have access to at least some, if not most, content
through their provision of service. BIAS providers' inability to access
encrypted content is irrelevant; what matters is the information the
BIAS providers can access. Moreover, even when traffic is encrypted,
some content may remain visible or inferable to the provider. We agree
with FTC staff that ``[c]ontent data can be highly personalized and
granular, allowing analyses that would not be possible with less rich
data sets.'' In recognition of its importance, Congress has repeatedly
and emphatically protected the privacy of communications content in
various legal contexts, expressly prohibiting service providers from
disclosing the contents of communications they carry, subject to
statutorily enumerated exceptions, since at least 1912. We agree with
commenters that ``Americans do not expect their broadband providers to
be reading their electronic communications any more than they expect
them to be
[[Page 87287]]
keeping a list of their correspondents.'' The same rationale that
supports the treatment of the content of BIAS communications as
customer PI supports the treatment of the content carried through other
telecommunications services as customer PI.
102. Definition of Content. At the outset, we define content as any
part of the substance, purport, or meaning of a communication or any
other part of a communication that is highly suggestive of the
substance, purpose, or meaning of a communication. We sought comment on
how to define content in the NPRM, but received no substantive
recommendations; consequently we base our definition on the long-
established terminology of ECPA and Section 705. We recognize that
sophisticated monitoring techniques have blurred the line between
content and metadata, with metadata increasingly being used to make
valuable determinations about users previously only possible with
content. This has complicated traditional notions of how to define and
treat content. We intend our definition to be flexible enough to
encompass any element of the BIAS communication that conveys or implies
any part of its substance, purport, or meaning. As a definitional
matter, content in an inbound communication is no different from
content in an outbound communication. As discussed above, because the
categories of customer PI are not mutually exclusive, some content may
also satisfy the definitions of CPNI and/or PII. Because we conclude
that section 222(a) protects content as its own category of customer
PI, we need not determine which types of content are also CPNI or PII.
103. Multiple components of an IP data packet may constitute or
contain BIAS content. First and foremost, we agree with commenters that
the application payload is always content. As discussed above, the
application payload is the part of the IP packet containing the
substance of the communication between the customer and the entity with
which she is communicating. Examples of application payloads include
the body of a Web page, the text of an email or instant message, the
video served by a streaming service, the audiovisual stream in a video
chat, or the maps served by a ride-sharing app. BIAS providers' use of
application payloads for network management is also one reason why BIAS
content is not wholly equivalent to telephone conversations. Voice
carriers do not scan a phone conversation to secure the network or
reduce congestion. Application payloads in the broadband Internet
context are far more sophisticated and complex than mere audio
transmissions over a telephone line. However, other portions of the
packet also may contain content. For example, as discussed above, the
application header may reveal aspects of the application payload from
which the content may be easily inferred--such as source and
destination email addresses or Web site URLs. Application usage
information may also reveal content by disclosing the applications
customers use or the substance of how they use them. We agree with FTC
Staff that BIAS content includes, but is not limited to, the ``contents
of emails; communications on social media; search terms; Web site
comments; items in shopping carts; inputs on web-based forms; and
consumers' documents, photos, videos, books read, [and] movies
watched[.]'' We emphasize that our examples of BIAS content are not
exhaustive and others may manifest over time as analytical techniques
improve.
104. We reject arguments that protecting BIAS content under section
222 is unnecessary or unlawful because section 705 of the Act, and the
Electronic Communications Privacy Act (ECPA) or the Communications
Assistance for Law Enforcement Act (CALEA), already protect content.
Commenters do not claim that these various other laws are mutually
exclusive with each other, belying the notion that the existence of
multiple sources of authority in this area is inherently a problem.
Instead, we find that section 222 complements these other laws in
establishing a framework for protecting the content carried by
telecommunications carriers. Given the importance of protecting
content, it is reasonable to interpret section 222 as creating
additional, complementary protection. Similarly, for example, both the
Children's Online Privacy Protection Act and the Video Privacy
Protection Act may protect videos that young children watch online.
105. We also disagree with the argument that because the data
protected by section 705 ``bear scant resemblance'' to content or other
forms of customer PI, our interpretation of section 222 is erroneous.
Congress can enact two statutory provisions that contain different
scopes, and it is a cardinal principle of statutory construction that
we should attempt to give meaning to both. Any incongruity between the
scope of sections 222 and 705 only demonstrates that the statutes are
complementary and part of Congress's broad scheme to protect customer
privacy. Sections 222 and 705 independently require telecommunications
carriers to protect communications content.
4. De-Identified Data
106. In this section we describe a corollary regarding the
circumstances in which information that constituted customer PI (i.e.,
PII, content, or individually identifiable CPNI) can comfortably be
said to have been de-identified. As discussed below, based on the
record we are concerned that carriers not be allowed to skirt the
protections of our rules by making unsupported assertions that customer
PI has been ``de-identified'' and thus is not subject to our consent
regime, when in fact the information remains reasonably linkable to an
individual or device. As 38 public interest organizations pointed out
in a joint letter, ``[i]t is often trivial to re-identify data that has
supposedly been de-identified.'' We accordingly adopt a strong, multi-
part approach regarding the circumstances under which carriers can
properly consider data to be de-identified, using the three part test
for de-identification articulated by the FTC in 2012. The
Administration's CPBR also uses this standard. Specifically, we find
that customer proprietary information is de-identified if the carrier
(1) determines that the information is not reasonably linkable to an
individual or device; (2) publicly commits to maintain and use the data
in a non-individually identifiable fashion and to not attempt to re-
identify the data; and (3) contractually prohibits any entity to which
it discloses or permits access to the de-identified data from
attempting to re-identify the data. As discussed in greater detail
below, this third part of the test applies to entities with which the
provider contracts to share de-identified customer information. It does
not apply to the general disclosure or publication of highly aggregated
summary statistics that cannot be disaggregated--for example, the use
of statistics in advertisements (e.g., ``We offer great coverage in
rural areas, because that is where 70% of our customers live.'') We
apply these requirements to both BIAS and other telecommunications
services. The record does not demonstrate a need to treat de-identified
information differently in the voice context versus the BIAS context.
We agree with the Greenlining Institute and other commenters that a
uniform regime, ``is easier for the carriers, easier [for] enforcement,
and easier for customers to understand[.]''
[[Page 87288]]
a. Adoption of the FTC's Multi-Part Test
107. The record reflects that advances in technology and data
analytics make it increasingly difficult to de-identify information
such that it is not re-identifiable. The Administration's 2014 Big Data
Report observed that ``[m]any technologists are of the view that de-
identification of data as a means of protecting individual privacy is,
at best, a limited proposition.'' As the Electronic Privacy Information
Center notes, ``[w]idely-publicized anonymization failures have shown
that even relatively sophisticated techniques have still permitted
researchers to identify particular individuals in large data sets.'' We
also agree with the FTC's conclusion in its 2012 Privacy Report that
``not only is it possible to re-identify non-PII data through various
means, businesses have strong incentives to actually do so.''
108. For these reasons, our approach to de-identification
establishes a strong, technology-neutral standard as well as safeguards
to mitigate the incentives to re-identify customers' proprietary
information. Furthermore, because companies, including BIAS providers,
have incentives to re-identify customer information so that it can be
further monetized, we agree with Privacy Rights Clearinghouse that the
burden of proving that individual customer identities and
characteristics have been removed from the data must rest with the
provider. Taking this burden assignment into account, we find that our
multi-part approach, grounded in FTC guidance, will ensure that as
technology changes, customer information is protected, while at the
same time minimizing burdens and maintaining the utility of de-
identified customer information.
109. As such, we disagree with those commenters who urge us to use
a different de-identification framework, such as that used in the HIPAA
safe harbor context. We find that the framework we adopt enables
flexibility to accommodate evolving technology and statistical methods.
In contrast, we find that developing a list of identifiers that must be
removed from data to render such data de-identified is not feasible
given the breadth of data to which BIAS providers have access, and
would also rapidly become obsolete in the evolving broadband context.
110. The three-part test we adopt today for de-identification also
contemplates the statutory exception for ``aggregate customer
information,'' as it defines the circumstances in which the Commission
will find that ``individual customer identities and characteristics
have been removed'' from collective data. Likewise, our approach
addresses arguments in the record that the Commission must give meaning
to the fact that the customer approval requirement of section 222(c)(1)
applies to ``individually identifiable'' CPNI, as our test for de-
identification addresses whether an individual's CPNI or PII will not
be deemed to be individually identifiable in practice due to steps
taken by the carrier prior to using or sharing the data.
(i) Part One--Not Reasonably Linkable
111. First, for information to be de-identified under our rules, we
require providers to determine that the information is not linked or
reasonably linkable to an individual or device. Because we are
describing the scope of what is identifiable, we think it is
appropriate to use the same standard that we use to define personally
identifiable information (PII). Above we define PII as information that
is linked or reasonably linkable to an individual or device, and
conversely we find it appropriate to limit de-identified information to
information that is not linked or reasonably linkable to an individual
or device. As we discussed above in our definition of PII, we agree
with commenters that the ``linked or reasonably linkable'' standard--
used by the FTC in its Privacy Report--provides useful guidance on what
it means for information to be individually identifiable without being
either overly rigid or vague. As we discussed above, information is
linked or reasonably linkable to an individual or device if it can
reasonably be used on its own, in context, or in combination (1) to
identify an individual or device, or (2) to logically associate with
other information about a specific individual or device. New methods
are increasingly capable of re-identifying information previously
thought to be sufficiently anonymized. For these reasons, we will not
specify an exhaustive list of identifiers, nor will we declare certain
techniques to be per se sufficient or insufficient to achieve de-
identification. The test instead focuses on the outcome required, that
is, that to be de-identified, the data must no longer be linked or
reasonably linkable to an individual or device. We also agree with AT&T
that we should not ``dictate specific approaches to de-identifying
data'' because ``[a]ny Commission-mandated approach would quickly
become obsolete as new de-identification techniques are developed.''
112. We make clear that reasonableness depends on ease of re-
identification, not the cost of de-identification. As discussed above,
customers' privacy interests include many noncommercial values, such as
avoidance of embarrassment, concern for one's reputation, and control
over the context of disclosure of one's information. The decisive
question here is not how difficult it is to de-identify the
information, but rather the ease with which the information could be
re-identified. The FTC's linkability standard aligns with our approach:
``[W]hat qualifies as a reasonable level of [de-identification] depends
upon the particular circumstances, including the available methods and
technologies. In addition, the nature of the data at issue and the
purposes for which it will be used are also relevant.''
113. Consistent with the FTC's guidance and the carrier's burden to
prove that information is in fact de-identified, if carriers choose to
maintain customer PI in both identifiable and de-identified formats,
they must silo the data so that one dataset is not reasonably linkable
to the other. Cross-referencing the datasets links the de-identified
information with an identified customer, thus rendering the de-
identified information linked or reasonably linkable. We agree with
Verizon that ``providers should not be allowed to use de-identification
and re-identification to circumvent consumers' privacy choices.''
114. We disagree with commenters who argue that the linkability
standard should apply only to individuals and should not extend to
devices. As explained above, we agree with the FTC staff that ``[a]s
consumer devices become more personal and associated with individual
users, the distinction between a device and its user continues to
blur.'' This is not an uncommon conclusion in the Internet ecosystem;
the Digital Advertising Alliance also recognizes the connection between
individuals and devices in its definition of de-identification, stating
that ``[d]ata has been De-Identified when . . . the data cannot
reasonably . . . be connected to or associated with a particular
computer or device.''
115. Similarly, for the reasons discussed above, we disagree with
commenters who argue that IP addresses and MAC addresses should not be
considered reasonably linkable to an individual or device on the theory
that ``[t]hey only identify Internet endpoints, each of which, in turn,
may reach multiple people or devices.'' The question in this test is
whether the information in question is reasonably linkable to an
individual or device. Consider, for example, a typical fixed
residential customer. The BIAS provider
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assigns that customer an IP address, and associates that customer with
that IP address in its records. It is difficult to portray that
scenario as not involving PII. On the other hand, if the BIAS provider
shares the IP address with a third party without other identifying
information, it may well be the case that the provider has not shared
information that is ``reasonably linkable'' to an individual or device.
Again, when confronted with the question, the Commission will look at
all facts available and make a pragmatic determination of whether the
information in question is ``reasonably linkable'' to an individual or
device. NCTA expresses concern that finding that IP addresses can
constitute PII will undermine judicial precedent under the Video
Privacy Protection Act. As noted, we are not making categorical
findings, but rather are looking to the ``reasonably linkable''
standard in finding whether information constitutes PII. We also
observe that we are confronted with interpreting section 222 of the
Communications Act and its requirements concerning the protection of
``proprietary information of, and relating to, . . . customers.'' This
is distinct from the language of the VPPA, which more specifically
defines PII as ``information which identifies a person as having
requested or obtained specific video materials or services from a video
tape service provider.'' Accordingly, a Commission finding that certain
information is or is not PII for purposes of section 222 of the
Communications Act does not answer the question of whether or not a
court should consider that information to be PII under the VPPA or any
other statutory provision.
(ii) Part Two--Public Commitments
116. Second, for information to meet our definition of de-
identified, carriers must publicly commit to maintain and use de-
identified information in a de-identified fashion and to not attempt to
re-identify the data. Such public commitments inform customers of their
legal rights and the provider's practices, and ``promot[e]
accountability.'' As we discussed above, this level of transparency is
a cornerstone of privacy best practices generally and these rules
specifically. As such, we disagree with commenters who argue that such
public commitments are unnecessary. This part of the test is consistent
with FTC guidance--which has broad support in the record--and the CPBR.
We agree that ``[c]ompanies that can demonstrate that they live up to
their privacy commitments have powerful means of maintaining and
strengthening consumer trust.'' Further, we find that this requirement
will impose a minimal burden on providers, as a carrier can satisfy
this requirement with a statement in its privacy policy.
(iii) Part Three--Contractual Limits on Other Entities
117. Third, for information to meet our definition of de-
identified, we require telecommunications carriers to contractually
prohibit recipients of de-identified information from attempting to re-
identify it. This requirement is consistent with the FTC's de-
identification guidelines and the Administration's CPBR, as well as
industry best practices. The DAA guidance also requires that these
commitments from recipients of the data be passed along to any further
downstream recipients as well, which we support.
118. Businesses are often in the best position to control each
other's practices. For example, AT&T's Privacy FAQ explains, ``When we
provide individual anonymous information to businesses, we require that
they only use it to compile aggregate reports, and for no other
purpose. We also require businesses to agree they will not attempt to
identify any person using this information . . . .'' The record
demonstrates that such contractual prohibitions are an important part
of protecting consumer privacy because re-identification science is
rapidly evolving. We agree with Verizon and other commenters that
``anyone with whom the provider shares such de-identified data should
be prohibited from trying to re-identify it.'' It is our expectation
that carriers will need to monitor their contracts to maintain the
carriers' continued adherence to these requirements. Consequently, we
need not adopt a separate part of the test to delineate monitoring
requirements. Further, we observe that third parties will have every
incentive to comply with their contractual obligations to avoid both
civil liability and enforcement actions by the FTC or the Commission
(depending on the agency with authority over the third party). If
violations occur, we expect carriers to take steps to protect the
confidentiality of customer's proprietary information.
119. We agree with commenters who recommend a narrow clarification
to the third part of the de-identification framework in situations
involving disclosure of highly abstract statistical information. These
situations include, for example, mass market advertisements or annual
reports that reference the total number of subscribers or the
percentage of customers at certain speed thresholds. AT&T explains that
these scenarios can involve customer information that is so ``highly
abstract[ed]'' that it is, ``in many circumstances, simply impossible''
to re-identify the data. Professor Narayanan concurs, noting that when
statistical data is highly abstract, there is minimal risk of re-
identification. We agree. Consequently, we will not require contractual
commitments when the de-identified customer information is so highly
abstracted that a reasonable data science expert would not consider it
possible to re-identify it.
120. A number of commenters also ask for a narrow exception to this
part of the de-identification test for the purposes of various types of
cybersecurity or de-identification research. As explained below, we
find that certain uses and disclosures of customer PI for the purpose
of conducting research to improve and protect networks and/or services
are part of the telecommunications service or ``necessary to, or used
in'' the provision of the telecommunications service for the purposes
of these rules. Since telecommunications carriers must be able to
provide secure networks to their customers, we include security
research within the scope of research allowed under this limitation.
Security research also falls under the exception covered in Part
III.D.2.b, infra, regarding uses of customer PI to protect the rights
and property of a carrier, or to protect users from fraud, abuse, or
unlawful use of the networks.
(iv) Case-by-Case Application
121. In adopting a technology-neutral standard to determine whether
otherwise personally identifiable customer PI has been de-identified,
we have eschewed an approach that finds particular techniques to be per
se acceptable or unacceptable. We accordingly need not resolve the
longstanding debate in the broader privacy literature concerning the
circumstances under which data may be said to be reasonably de-
identified, including the specific debate in the record concerning the
appropriate role of aggregation. That said, by adopting the three-part
test, we have made clear that a carrier cannot ``make an end-run around
privacy rules simply by removing certain identifiers from data, while
leaving vast swaths of customer details largely intact.'' As Professor
Ohm has stated, the FTC guidance on which we pattern our standard is
``a very aggressive and appropriately strong form of de-
identification'' and it is one that requires strong technological
protections as well as business processes in its implementation. The
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Commission will carefully monitor carriers' practices in this area. We
emphasize that carriers relying on de-identification for use and
sharing of customer proprietary information should employ well-
accepted, technological best practices in order to meet the three-part
test described above--and employ practices that keep pace with evolving
technology and privacy science.
C. Providing Meaningful Notice of Privacy Policies
122. In this section, we adopt privacy policy notice requirements
for providers of broadband Internet access services and other
telecommunications services. There is broad recognition of the
importance of transparency as one of the core fair information practice
principles (FIPPs), and it is an essential component of many privacy
laws and regulations, including the Satellite and Cable Privacy Acts.
Customer notification is also among the least intrusive and most
effective measures at our disposal for giving consumers tools to make
informed privacy decisions. In fact, it is only possible for customers
to give informed consent to the use of their confidential information
if telecommunications carriers give their customers easy access to
clear and conspicuous, comprehensible, and not misleading information
about what customer data the carriers collect; how they use it; who it
is shared with and for what purposes; and how customers can exercise
their privacy choices. Therefore, we adopt rules to ensure that BIAS
providers' and other telecommunications carriers' privacy notices meet
these essential criteria, which provide transparency and enable the
exercise of choice.
123. In adopting these transparency requirements, we build on and
harmonize our existing section 222 rules for voice providers with BIAS
providers' existing requirement to disclose their privacy policy under
the 2010 and 2015 Open Internet Orders. For today's rules, we look to
the record in this proceeding, which includes submissions from
providers, consumer advocates, other government agencies, and others
about what does and does not work with respect to privacy policies. We
observe in particular that notice is fundamental to the FTC's privacy
regime, acting as a basis for its implementation of FIPPs and forming
required components of their enforcement proceedings. Based on that
record, we adopt rules that require providers to disclose their privacy
practices, but decline to be prescriptive about either the format or
specific content of privacy policy notices in order to provide
flexibility to providers and to minimize the burden of compliance
levied by this requirement. Moreover, the record reflects that many
BIAS providers and other telecommunications carriers already provide
thorough notice of their privacy practices. In the interest of further
minimizing the burden of transparency, particularly for small
providers, we also direct the Consumer Advisory Committee to convene a
multi-stakeholder process to develop a model privacy policy notice that
will serve as a safe harbor for our notice requirements.
124. We recognize that some commenters have criticized privacy
notice requirements as providing incomplete protections for consumers.
Notices by themselves do not give consumers the power to control their
information; notices are not always read or understood, and newer
developments in tracking and analytics can reveal more about consumers
than most people realize. However, none of these criticisms eliminates
the fundamental need for and benefit of privacy notices. If consumers
do not have access to the information they need to understand what
personal data is being collected and how their data is being used and
shared, they cannot make choices about those practices. The fact that
poorly written or poorly distributed notices can confound consumer
understanding does not make well-formed notices useless, and while one
consumer may ignore a notice, another who has a compelling desire to
protect her privacy will benefit substantially from it. Notice also
remains an essential part of today's privacy frameworks, even as big
data analysis creates new privacy challenges. As the recent
Administration Big Data Report explains, notice and choice structures
may not be sufficient to account for all privacy effects of ``big
data,'' but such frameworks are necessary to protect consumers from a
range of active privacy threats.
125. Below we lay out the specific transparency requirements we
adopt today. First, we require that those privacy notices inform
customers about what confidential information the providers collect,
how they use it, and under what circumstances they share it. We also
require that providers inform their customers about customers' rights
to opt in to or out of (as the case may be) the use or sharing of their
confidential information. This information must be presented in a way
that is clear and conspicuous, in language that is comprehensible and
not misleading. We will consider information to be misleading if it
includes material misrepresentations or omissions. Second, we require
that providers present their privacy notice to customers at the point
of sale prior to the purchase of service, and that they make their
privacy policies persistently available and easily accessible on their
Web sites, apps, and the functional equivalents thereof. Finally, we
require providers to give their customers advance notice of material
changes to their privacy policies. In adopting these transparency
rules, we are implementing, in part, sections 222(a) and 222(c)(1),
under which we find that supplying customers with the information they
need to make informed decisions about the use and sharing of their
personal information is an element of ``informed'' approval within the
meaning of section 222, as well as necessary to protecting the
confidentiality of customer proprietary information.
1. Required Privacy Disclosures
126. Customers must have access to information about the personal
data that a BIAS provider or other telecommunications carrier collects,
uses, and shares, in order to make decisions about whether to do
business with that provider, and in order to exercise their own privacy
decisions. Absent such notice, the broad range of data that a provider
is capable of gathering by virtue of providing service could leave
customers with only a vague concept of how their privacy is affected by
their service provider. We also agree with the FTC that disclosing this
information ``provides an important accountability function,'' as
disclosure of this information ``constitute[s] public commitments
regarding companies' data practices.'' To enable customers to exercise
informed choice, and to reduce the potential for confusion,
misunderstanding, and carrier abuse, we find that a carrier's privacy
notices must accurately describe the carrier's privacy policies with
regard to its collection, use, and sharing of its customers' data.
Therefore, we adopt rules that require each telecommunications
carrier's notice of privacy policies to accurately specify and
describe:
The types of customer PI that the carrier collects by
virtue of its provision of service, and how the carrier uses that
information;
Under what circumstances a carrier discloses or permits
access to each type of customer PI that it collects, including the
categories of entities to which the carrier discloses or permits access
to customer PI and the purposes for which the customer PI will be used
by each category of entities; and
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How customers can exercise their privacy choices.
We address each of these requirements in turn.
127. Types of Customer PI Collected, and How It Is Used. In order
to make informed decisions about their privacy, customers must first
know what types of their information their provider collects through
the customers' use of the service. Therefore, we require BIAS providers
and other telecommunications carriers to specify the types of customer
PI that they collect by virtue of provision of the telecommunications
service, and how they use that information. Pursuant to the voice rules
and the 2010 Open Internet Order, all BIAS providers already provide
customers with information about their privacy policies. As such, we
find that this requirement will not impose a significant burden on
providers, and in some cases will decrease existing burdens.
128. Likewise, customers have a right to know how their information
is being used and under what circumstances it is being disclosed in
order to make informed privacy choices. Notices that omit these
explanations fail to provide the context that customers need to
exercise their choices. We emphasize that the notice must be
sufficiently detailed to enable a reasonable consumer to make an
informed choice
129. We do not require providers to divulge the inner workings of
their data use programs. Instead, we find that to the extent that the
notice requires providers to divulge the existence of such programs,
the benefits to the market of more complete information, as well as the
benefits to customers in knowing how their information is used,
outweighs any individual advantage gained by any one competitor in
keeping the existence of the programs secret. We therefore disagree
with commenters that argue that these descriptions of how consumers'
information will be used unduly jeopardize their competitive efforts.
130. Sharing of Customer PI with Affiliates and Third Parties. We
also require that providers' privacy policies notify customers about
the types of affiliates and third parties with which they share
customer information, and the purposes for which the affiliates and
third parties will use that information. A critical part of deciding
whether to approve of the sharing of information is knowing who is
receiving that information and for what purposes. This information will
allow customers to gauge their comfort with the privacy practices and
incentives of those other entities, whether they are affiliates or
third parties. It will also promote customer confidence in their
telecommunications service by providing concrete information and
reducing uncertainty as to how their information is being used by the
various parties in the data-sharing and marketing ecosystems. While our
existing CPNI rules are more specific in requiring that individual
entities be disclosed, we seek to minimize customer confusion and
provider burden by adopting an approach used by the FTC by allowing
disclosure of categories of entities. We also encourage carriers to
make these categories of entities as useful and understandable to
customers as possible. By way of example, the FTC's regulations
implementing the GLBA privacy rules will find a covered institution in
compliance with its rules if it lists particular categories of third
party entities that it shares information with, distinguishing, for
instance, between financial services providers, other companies, and
other entities. The FTC's rules further specify that institutions
should provide examples of businesses in those categories. In the
context of communications customers' information, relevant categories
might include providers of communications and communications-related
services, customer-facing sellers of other goods and services,
marketing and advertising companies, research and development, and
nonprofit organizations.
131. We find that requiring providers to disclose categories of
entities with which they share customer information and the purposes
for which the customer PI will be used by each category of entities
balances customers' rights to meaningful transparency with the reality
of changing circumstances and the need to avoid overlong or over-
frequent notifications. Because we harmonize these rules across BIAS
and other telecommunications services, we eliminate the requirement
that telecommunications services specify the ``specific entities'' that
receive customer information in their notices of privacy policies
accompanying solicitations for customer approval. We therefore reject
calls to mandate disclosure of a list of the specific entities that
receive customer PI. While some customers may benefit from receiving
such detailed information, we are persuaded by commenters who assert
that requiring such granularity would be unduly burdensome on carriers
and induce notice fatigue in many customers. For instance, carriers
would be faced with the near-continuous need to provide new notices
every time contracts with particular vendors change or if third parties
alter their corporate structure--and customers, in turn, would be
inconvenienced with an overabundance of notices. Furthermore, a list of
specific entities may not in itself aid the average consumer in making
a privacy decision more than the requirement that we adopt, which
ensures that consumers understand what third parties that receive their
information do as a general matter. We therefore adopt the requirement
that carriers need only provide categories of entities with whom
customer PI is shared, minimizing the burden on telecommunications
carriers. If a provider finds that providing notice of the specific
entities with which it shares customer PI would increase customer
confidence, nothing prevents a provider from doing so, and we would
encourage notices to include as much useful information to customers as
possible, while maintaining their clarity, concision, and
comprehensibility, as discussed in Part III.C.3, below. Doing so does
not require bombarding customers with pages of dense legal language;
providers may make use of layered privacy notices or other techniques
to ease comprehension and readability as necessary.
132. Customers' Rights with Respect to Their PI. We also adopt our
NPRM proposal to require BIAS provider and other telecommunications
carrier privacy notices to provide certain minimum information.
Carriers need not, however, repeat any of these ``rights'' statements
verbatim, and we encourage carriers to adapt these statements in
manners that will be most effective based on their extensive experience
with their customer base. Specifically, carriers' privacy notices must:
Specify and describe customers' opt-in and opt-out rights
with respect to their own PI. This includes explaining that:
[cir] A denial of approval to use, disclose, or permit access to
customer PI for purposes other than providing telecommunications
service will not affect the provision of the telecommunications
services of which they are a customer.
[cir] any approval, denial, or withdrawal of approval for use of
the customer PI for any purposes other than providing
telecommunications service is valid until the customer affirmatively
revokes such approval or denial, and that the customer has the right to
deny or withdraw access to such PI at any time. However, the notice
should also explain that the carrier may be compelled, or permitted, to
disclose a customer's PI
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when such disclosure is provided for by other laws.
Provide access to a simple, easy-to-use mechanism for
customers to provide or withdraw their consent to use, disclose, or
permit access to customer PI as required by these rules.
133. These notice requirements are intended to ensure that
providers inform their customers that they have the right to opt into
or out of the use and sharing of their information, as well as how to
make those choices known to the provider. We discuss the choice
mechanism itself in Part III.D.4, infra. Requiring providers to
describe in a single place how information is collected, used, and
shared, as well as what the consumers' rights are to control that
collection, use, and sharing, enhances the opportunity for customers to
make informed decisions. Likewise, requiring the notice to provide
access to the choice mechanism ensures that the mechanism is easily
available and accessible as soon as the customer receives the necessary
privacy information. This is important, since studies have shown that
``adding just a 15-second delay between the notice and the loading of
[a] Web page where subjects choose whether to reveal their information
eliminates the privacy-protective effect of the notice.'' As discussed
further below, we decline to specify particular formats for carriers to
provide access to their choice mechanisms, recognizing that different
forms of access to the choice mechanism (e.g., a link to a Web site, a
mobile dashboard, or a toll-free number) may be more appropriate
depending on the context in which the notice may be given (e.g., on a
provider's Web site, in a provider's app, or in a paper disclosure
presented in a provider's store).
134. Studies have shown that customers are often resigned to an
inability to control their information, and may be under a mistaken
impression that exercising their rights may result in degraded service.
Thus, we require providers' notice of privacy policies to also inform
customers that denying a provider the ability to use or share customer
PI will not affect their ability to receive service. As noted below,
this provision does not mean that carriers categorically cannot engage
in financial incentive practices. This parallels the existing section
222 rules, which require carriers to ``clearly state that a denial of
approval will not affect the provision of any services to which the
customer subscribes.'' Since providers drafting their notices have
clear incentives to encourage customers to permit the use and sharing
of customer PI, it can be easy for customers to misconstrue exactly
what is conditioned upon their permission. These provisions are
intended to make customers aware that the offer of choice is not merely
pro forma.
135. We permit providers to make clear and neutral statements about
potential consequences when customers decline to allow the use or
sharing of their personal information. We require that any such
statements be clear and neutral in order to prevent them from obscuring
the basic fact of the customer's right to prevent the use of her
information without loss of service. Allowing difficult-to-read or
biased statements would run counter to our goal of ensuring that
notices overall are clear and conspicuous, comprehensible, and not
misleading. NTCA recommends that we remove or modify from the NPRM's
proposal the requirement that the explanation be brief. In the interest
of allowing more flexibility, we remove this requirement, with the
understanding that brevity is often, but not always, a component of
clarity.
136. We require providers to inform customers that their privacy
choices will remain in effect until the customers change them, and that
customers have the right to change them at any time. We acknowledge
that ``[c]ustomers may make hasty decisions in the moment simply to
obtain Internet access . . . [and] therefore appreciate the reminder
that they have the opportunity to change their mind.'' We expect
carriers' privacy promises to customers and the privacy choices
customers make to be honored, including, for example, in connection
with a carrier's bankruptcy. As the FTC has done in its groundbreaking
work in this area, the FCC will be vocal in support of customer privacy
interests that a carrier's bankruptcy may raise.
2. Timing and Placement of Notices
137. There is broad agreement that, in order to be useful, privacy
policy notices must be clearly, conspicuously, and persistently
available, and not overly burdensome to the carrier or fatiguing to the
customer. We therefore require telecommunications carriers to provide
notices of privacy policies at the point of sale prior to the purchase
of service, and also to make them clearly, conspicuously, and
persistently available on carriers' Web sites and via carriers' apps
that are used to manage service, if any. We also eliminate periodic
notice requirements from the voice CPNI rules.
138. Point of Sale. We agree with commenters that requiring notices
at the point of sale ensures that notices are relevant in the context
in which they are given, since this is a time when a customer can still
decide whether or not to acquire or commit to paying for service, and
it also allows customers to exercise their privacy choices when the
carrier begins to collect information from them. In this, we agree with
the FTC, which finds that the most relevant time is when consumers sign
up for service. The proximity in time between sale and use of
information means that a point-of-sale notice, in many if not most
instances, serves the same function as a just-in-time notice--that of
providing information at the most relevant point in time. Consumer
groups such as the Center for Digital Democracy and providers such as
Sprint also appear to agree on this point. The point-of-sale
requirement is also consistent with the transparency requirements of
the 2010 Open Internet Order, which requires disclosure of privacy
policies at the point of sale. As such, we find that this requirement
will impose a minimal incremental burden on BIAS providers. The record
further indicates that providing notice at the point of sale can be
less burdensome for a carrier, in part because it allows the provider
to walk a customer through the terms of the agreement. Providing notice
at the point of sale, and not after a customer has committed to a
subscription, can also allow carriers to compete on privacy.
139. We clarify that a ``point of sale'' need not be a physical
location. Where the point of sale is over voice communications, we
require providers to give customers a means to access the notice,
either by directing them to an easily-findable Web site, or, if the
customer lacks Internet access, providing the text of the notice of
privacy policies in print or some other way agreed upon by the
customer. We find that this requirement adequately addresses record
concerns about the burdens associated with communicating polices orally
to customers.
140. Clear, Conspicuous, and Persistent Notice. We also require
telecommunications carriers to make their notices persistently
available through a clear and conspicuous link on the carrier's
homepage, through the provider's application (if it provides one for
account management purposes), and any functional equivalents of the
homepage or application. This requirement also reflects the
transparency requirements in the 2010 Open Internet Order, which
mandate ``at a minimum, the prominent display of disclosures on a
publicly available . . . Web site,'' and as such, should add a minimal
burden for BIAS providers. Persistent and visible availability is
critical; customers must be able to
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review the notice and understand the carrier's privacy practices at any
time since they may wish to reevaluate their privacy choices as their
use of services change, as their personal circumstances change, or as
they evaluate and learn about the programs offered by the provider.
Persistent access to the notice of privacy policies also ensures that
customers need not rely upon their memory of the notice that they
viewed at the point of sale; so long as they have access to the
provider's Web site, app, or equivalent, they can review the notice. As
such, we require providers to at least provide a link to the web-hosted
notice in a clear and conspicuous location on its homepage, to ensure
that customers who visit the homepage may easily find it.
141. We require the notice of privacy policies to be clearly and
conspicuously present not only on the provider's Web site, but to be
accessible via any application (``app'') supplied to customers by the
provider that serves as a means of managing their subscription to the
telecommunications service. As more consumers rely upon mobile devices
to access online information, a provider's Web site may become less of
a central resource for information about the provider's policies and
practices. Certain mobile apps serve much the same function as a mobile
Web site interface, giving customers tools to manage their accounts
with their providers. As a significant point of contact with the
customer, such apps are an ideal place for customers to be able to find
the notice of privacy policies. We do not, however, expect that every
app supplied by a provider must carry the notice of privacy policies
for the entire service--for instance, a mobile broadband provider that
bundles a sports news app or a mobile game with its phones and services
would not need to provide the privacy notice we require here with those
apps. Nor do we require providers who lack an app to develop one.
However, we require carriers that provide apps that manage a customer's
billing or data usage, or otherwise serve as a functional equivalent to
a provider's Web site, to ensure that those apps provide at least a
link to a viewable notice of privacy policies.
142. Providing the notice both via the app and on the provider's
Web site increases customers' ability to access and find the policy
regardless of their primary point of contact with the provider. We do,
however, wish to ensure that customers can still reach notices even as
providers may develop other channels of contact with their customers,
and thus require that the notice be made available on any functional
equivalents of the Web site or app that may be developed. While we
anticipate that all BIAS providers and most other telecommunications
providers have a Web site, those that do not may provide their notices
to customers in paper form or some other format agreed upon by the
customer.
143. No Periodic Notice Requirement. We decline to require periodic
notice on an annual or bi-annual basis. While periodic notices might
serve to remind customers of their ability to exercise privacy choices,
we remain mindful of the potential for notice fatigue and find that
notices at the point of sale, supplemented by persistently available
notices on providers' Web sites, and notices of material change to
privacy policies, is sufficient to keep customers informed.
Additionally, we believe that periodic notices might distract from
notices of material changes, reducing the amount of customer attention
to such changes. We find that annual or periodic notices are
unnecessary or even counterproductive in this context, and we reduce
burdens on all telecommunications carriers--including smaller
carriers--by eliminating the pre-existing every-two-year notice
requirement from our section 222 rules.
3. Form and Format of Privacy Notices
144. Recognizing the importance of flexibility in finding
successful ways to communicate privacy policies to consumers, we
decline to adopt any specific form or format for privacy notices. We
agree with commenters that, in addition to running the risk of
providing insufficient flexibility, mandated standardized requirements
may unnecessarily increase burdens on providers, and prevent consumers
from benefitting from notices tailored to a specific provider's
practices. For example, the record reflects concerns that mandated
standardized requirements can increase burdens on providers, and can
also create a number of problems, including a lack of flexibility to
account for the fact that different carriers may have different needs,
such as creating comprehensive policies across different services. This
concern is especially prevalent for smaller carriers. At the same time,
we agree with commenters that whatever form of privacy notices a
provider adopts, in order to adequately inform customers of their
privacy rights, such privacy notices must clearly and conspicuously
provide information in language that is comprehensible and not
misleading, and be provided in the language used by the carrier to
transact business with its customer. We therefore require providers to
implement these general principles in formatting their privacy policy
notices.
145. These basic requirements for the form and format of privacy
policies build on existing Commission precedent regarding notice
requirements for voice providers and open Internet transparency
requirements for BIAS providers, and incorporate FTC guidance on
customer notice standards. These basic principles are well suited to
accommodating providers' and customers' changing needs as new business
models develop or as providers develop and refine new ways to convey
complex information to customers. Within these basic guidelines,
providers may use any format that conveys the required information,
including layering and adopting alternative methods of structuring the
notice or highlighting its provisions. We note that as standard
business practices for conveying complex information improve, we expect
notices of providers' privacy policies to keep pace. We encourage
innovative approaches to educating customers about privacy practices
and choices.
146. While we decline to mandate a standardized notice at this
time, the record demonstrates that voluntary standardization can
benefit both customers and providers. As such, as described below, we
adopt a voluntary safe harbor for a disclosure format that carriers may
use in meeting the rules' standards for being clear and conspicuous,
comprehensible, and not misleading.
147. Clear, Conspicuous, Comprehensible and Not Misleading.
Consistent with existing best practices, we require providers' privacy
notices to be readily available and written and formatted in ways that
ensure the material information in them is comprehensible and easily
understood. The record reflects broad agreement that providers' privacy
practices ``should be easily available [and] written in a clear way.''
A number of commenters noted that certain practices frustrate the
ability of customers to find and identify the important parts of
privacy notices, observing, for example, that notices could be
presented among or alongside distracting material, use unclear or
obscure language, presented with significant delays in ability for
consumers to act, or be placed only at the bottom of ``endless
scrolling'' pages. By mandating that notices be clear, conspicuous,
comprehensible, and not misleading, we prohibit such practices and
others that render notices unclear, illegible, inaccessible, or
needlessly obtuse.
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148. The NPRM framed these requirements in several ways, including
that notices be ``clear and conspicuous,'' as well as ``clearly
legible, use sufficiently large type, and be displayed in an area so as
to be readily apparent to the consumer.'' In adopting these rules, we
streamline these requirements by interpreting ``conspicuous'' to
include requirements for prominent display, and eliminate the
requirement for ``sufficiently large type,'' based upon the
understanding that insufficiently large type would not be
``comprehensible'' or ``clear and conspicuous.'' Removing this specific
requirement also preserves the ability for providers who may be able to
convey the necessary information through images or other non-textual
means.
149. We agree with the FTC's observation that existing notices of
privacy policies are frequently too long and unclear; overlong notices
are often inherently less comprehensible. As T-Mobile states, ``today's
busy consumers often have limited ability to fully review the hundreds
of privacy policies that apply to the apps, Web sites, and services
they use, and prefer simpler notices that provide meaningful
information.'' We recognize that providers must balance conveying the
required information in a comprehensive and comprehensible manner, and
therefore encourage, but do not require, providers to make their
notices as concise as possible while conveying the necessary
information. Layered notices, lauded by a few commenters, may be one of
several ways to achieve these parallel objectives.
150. The record also reflects that transparency is only effective
in preventing deception when the information shared is meaningful to
the recipient. We agree with the California Attorney General that
companies should ``alert consumers to potentially unexpected data
practices,'' and as such require that providers' notices not be
misleading in addition to being comprehensible. This requirement is
also consistent with FTC precedent.
151. Other Languages. We agree with the FTC that providers should
convey notices to their customers in a language that the customers can
understand. We therefore require providers to convey their entire
notices of privacy policies to customers in another language, if the
telecommunications carrier transacts business with the customer in that
other language. This requirement ensures that customers who are
advertised to in a particular language may also understand their
privacy rights in that same language. We note that for the purposes of
this rule, ``language'' also includes American Sign Language, meaning
that if the customer transacts business with the carrier in American
Sign Language, the notice would need to be made available in that
language. We conclude that this obligation appropriately balances
accommodating customers who primarily use languages other than English
and reducing the burden on providers, especially small providers, to
translate notices into languages that are unused by their particular
customers.
152. Mobile-Specific Considerations. We decline to mandate any
additional requirements for notices displayed on mobile devices. The
record indicates that providers desire flexibility to adapt notices to
be usable in the mobile environment for their customers, while consumer
advocates stress that the requirements for usability must be met in
some way, regardless of the specific formatting. So long as notices on
mobile devices meet the above guidelines and convey the necessary
information, they will comply with the rules. Providers are free to
experiment within those broad guidelines and the capabilities of mobile
display technology to find the best solution for their customers.
153. Safe Harbor for Standardized Privacy Notices. To encourage
adoption of standardized privacy notices without mandating a particular
form, we direct the Consumer Advisory Committee, which is composed of
both industry and consumer interests, to formulate a proposed
standardized notice format, based on input from a broad range of
stakeholders, within six months of the time that its new membership is
reconstituted, but, in any event, no later than June 1, 2017. There is
strong support in the record for creation of standardized notice, and
for use of multi-stakeholder processes. Standardized notices can assist
consumers in interpreting privacy policies, and allow them to better
compare the privacy policies of different providers, allowing increased
competition in privacy protections. Standardized notices can also
reduce compliance costs for providers, especially small providers, by
ensuring they can easily adopt a compliant form and format for their
notices.
154. The CAC has significant expertise in developing standard
broadband disclosures and other consumer disclosure issues. We find
that the Committee's experience makes it an ideal body to recommend a
notice format that will be sufficiently clear and easy to read to allow
consumers to easily understand and compare the privacy practices of
different providers. To ensure that the notice will be clear and easy
to read for all customers, it must also be accessible to persons with
disabilities. We delegate authority to the Wireline Competition Bureau,
Wireless Telecommunications Bureau, and Consumer & Governmental Affairs
Bureau to work with the CAC on the draft standardized notice. If the
CAC recommends a form or format that do not meet the Bureaus
expectations, the Bureaus may ask the CAC to consider changes and
submit a revised proposal for the Bureaus' review within 90 days of the
Bureaus' request. The Bureaus may also seek public comment, as they
deem appropriate, on any standardized notice the CAC recommends. We
also delegate authority to the Bureaus to issue a Public Notice
announcing any proposed format or formats that they conclude meet our
expectations for the safe harbor for making consumer-facing
disclosures.
155. Providers that voluntarily adopt a privacy notice format
developed by the CAC and approved by the Bureaus will be deemed to be
in compliance with the rules' requirements that notices be clear,
conspicuous, comprehensible, and not misleading. As with the Open
Internet BIAS transparency rules, use of the safe harbor notice is a
safe harbor with respect to the format of the required disclosure to
consumers. A provider meeting the safe harbor could still be found to
be in violation of the rules, for example, if the content of that
notice is misleading, otherwise inaccurate, or fails to include all
mandated information.
4. Advance Notice of Material Changes to Privacy Policies
156. We require telecommunications carriers to provide advance
notice of material changes to their privacy policies to their existing
customers, via email or other means of active communication agreed upon
by the customer. As with our requirements for the notice of privacy
policy, if a carrier does not have a Web site, it may provide notices
of material change notices to customers in paper form or some other
format agreed upon by the customer. As with a provider's privacy policy
notice, any advance notice of material changes to a privacy policy must
be clear, conspicuous, comprehensible, and not misleading. The notice
also must be completely translated into a language other than English
if the telecommunications carrier transacts business with the customer
in that language. This notice must inform customers of both (1) the
changes being made; and (2) customers' rights with respect to the
material change as it relates to their customer PI. In doing so, we
follow our own precedent and that
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of the FTC in recognizing the need for consumers to have up-to-date and
relevant information upon which to base their choices. This requirement
to notify customers of material change finds strong support in the
record.
157. The record reflects strong justifications for requiring
providers to give customers advance notice of material changes to their
privacy policies. In order to ensure that customer approval to use or
share customer PI is ``informed'' consent, customers must have accurate
and up-to-date information of what they are agreeing to in privacy
policies. The notice of material change requirement that we adopt is
consistent with the transparency requirements of the 2015 Open Internet
Order, which require providers to disclose material changes in, among
other things, ``commercial terms,'' which includes privacy policies.
Notices of material change are essential to respecting customers'
informed privacy choices; if a provider substantially changes its
privacy practices after a customer has agreed to a different set of
practices, the customer cannot be said to have given informed consent,
consistent with Section 222. This is particularly important when
providers are seeking a customer's opt-out consent, since the
customer's privacy rights could change whether or not they had actual
knowledge of the change in policy. We therefore disagree that such a
requirement is outweighed by the risk of notice fatigue; to the extent
that providers are frequently changing their policies materially, they
should alert their customers to that fact, or risk rendering their
earlier efforts at transparency fruitless.
158. For the purposes of this rule, we consider a ``material
change'' to be any change that a reasonable customer would consider
important to her decisions on her privacy. This parallels the consumer
interest-focused definition of ``material change'' used in the 2015
Open Internet Order. The definition differs from that in the 2015 Open
Internet Order in two respects: the customer's interest is defined by
the customer's decisions on privacy, and not choice of provider,
service, or application; and the reference to edge providers, which are
not relevant to the material changes at issue, has been removed. Such
changes would primarily include any changes to the types of customer PI
at issue, how each type of customer PI is used or shared and for what
purpose, or the categories of entities with which the customer PI is
shared. To provide guidance on the standard above, at minimum, if any
of the required information in the initial privacy notification
changes, then the carrier must provide the required update notice. We
adopt this guidance because the initial notice contains the information
on which customers are making their privacy decisions, and changes to
that information may alter how consumers grant permissions to their
carriers. We also limit carriers' requirements under this section to
existing customers, since only existing customers (and not new
applicants) would have a current privacy policy that could be
materially changed.
159. Delivering Notices of Material Changes. For consumers to
understand carriers' privacy practices, carriers must keep them up to
date and persistently available, but must also ensure that customers'
knowledge of them is up to date. It is not reasonable, for instance, to
expect consumers to visit carriers' privacy policies on a daily basis
to see if anything has changed. Therefore, we require
telecommunications carriers to notify an affected customer of material
changes to their privacy policies by contacting the customer with an
email or some other form of active communication agreed upon by the
customer.
160. We require active forms of communication with the customer
because merely altering the text of a privacy policy on the carrier's
Web site alone is insufficient. There is little chance that, absent
some form of affirmative contact, a customer would periodically visit
and review a provider's notices of privacy policies for any changes. We
also recommend, but do not require, providers to solicit customers'
contact preferences to enable customers to choose their preferred
method of active contact (such as email, text messaging, or some other
form of alert), as not all customers have the same contact preferences.
This is particularly true for voice services, where it may be less
likely that customers will visit a provider's Web site, and providers
may not have a customer's email address. While this does require each
provider to have some means of contacting the customer, it does not
require gathering more customer information, since, by virtue of
providing service, a provider will necessarily be able to contact a
customer, whether by email, text message, voice message, or postal
mail. Some commenters have expressed concern that requiring carriers to
send multiple notices in different formats for each material change
would present ``significant logistical challenges.'' The rules do not
require multiple formats for each notice of material change, but allow
carriers to use one method, whether that is email or some other active
method agreed upon by the customer.
161. The active notice requirements reflect the rationale behind
the transparency requirements of the 2015 Open Internet Order, which
require directly notifying end users if the provider is about to engage
in a network practice that will significantly affect a user's use of
the service. As explained in that Order, the purpose is to ``provide
the affected [] users with sufficient information . . . '' to make
choices that will affect their usage of the service. Given these
existing obligations, we disagree with commenters who suggest that
providing more than one notice is overly burdensome.
162. In addition to the active notice required above, we encourage
providers to include notices of changes in customers' billing
statements, whether a customer has selected electronic billing, paper
bills, or some other billing format. Providing notice via bills can
help ensure that customers will receive the notice, and makes it more
likely that they will correctly attribute the notice as coming from
their provider.
163. Contents of Advance Notice of Material Changes. As proposed in
the NPRM, the advance notice of material change must specify and
describe the changes made to the provider's privacy policies, including
any changes to what customer PI the provider collects; how it uses,
discloses, or permits access to such information; and the categories of
entities with which it shares that information. This explanation should
also include whether any changes are retroactive (i.e., they will
involve the use or sharing of past customer PI that the provider can
access). As discussed in Part III.D.1.a(ii) below, if the material
change affects previously collected information, then, consistent with
FTC precedent and recommendations, the carrier must obtain opt-in
consent for that new use of previously collected information. The
entire notice must be clear and conspicuous, comprehensible, and not
misleading. The notice of material change need not contain the entirety
of the provider's privacy policies, so long as it accurately conveys
the relevant changes and provides easy access to the full policies.
Moreover, the notice of material change must not simply provide fully
updated privacy policies without specifically identifying the changes--
as stated above, the changes must be identified clearly, conspicuously,
comprehensibly, and in a manner that is not misleading. For the same
reasons that we impose this requirement with respect to the notice of
privacy policies, we also require that
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the notice of material change be translated into a language other than
English if the telecommunications carrier transacts business with the
customer in that language. As with the initial notice of privacy
policies, the notice of material change must also explain the
customer's rights with regard to this information. We do not, however,
require that carriers use any particular language in these
explanations, and encourage carriers to adapt their notices in ways
that best suit their customers. We decline to specify how much advance
notification providers must give their customers before making material
changes to their privacy policies, recognizing that the appropriate
amount of time will vary, inter alia, based on the scope of the change
or the sensitivity of the information at issue. However, BIAS providers
and other telecommunications carriers must give customers sufficient
advance notice to allow the customers to exercise meaningful choice
with respect to those changed policies.
5. Harmonizing Voice Rules
164. As noted above, we apply these rules to all providers of
telecommunications services. Harmonizing the rules for broadband and
other telecommunications services will allow providers that offer
multiple (and frequently bundled) services within this category to
operate under a more uniform set of privacy rules, reducing potential
compliance costs. For example, our rules will enable providers to
provide the necessary notices for both voice and broadband services at
the point of sale, allowing the information to be conveyed in one
interaction for customers purchasing bundles, minimizing burdens on
providers and customers alike. Furthermore, this consistency also
enhances the ability of customers purchasing BIAS and other
telecommunications services from a single provider to make informed
choices regarding the handling of their information.
165. In harmonizing our notice rules across BIAS and other
telecommunications services, we are able to reduce burdens on providers
by eliminating certain existing requirements that we find are no longer
necessary. For instance, because we require that notice of privacy
practices be readily available on providers' Web sites, an already
common practice, we eliminate the requirement that notices of privacy
practices be re-sent to customers every 2 years. Further, because the
record evinces the growing need for flexibility in applying the
principles of transparency, we eliminate requirements that notices
provide that ``the customer has a right, and the carrier has a duty,
under federal law, to protect the confidentiality of CPNI'' --a
requirement that has apparently been interpreted as requiring that
language to appear verbatim in privacy policies. Similarly, we
eliminate requirements that emails containing notices of material
changes contain specific subject lines, leaving to providers the means
by which they can meet the general requirements that any communication
must be clear and conspicuous, comprehensible, and not misleading. We
find that in lieu of these more prescriptive requirements, the common-
sense rules we adopt above better ensure that customers receive truly
informative notices without unnecessary notice fatigue or unnecessary
regulatory burdens on carriers.
D. Customer Approval Requirements for the Use and Disclosure of
Customer PI
166. In this section, we adopt rules that give customers of BIAS
and other telecommunications services the tools they need to make
choices about the use and sharing of their personal information, and to
easily adjust those choices over the course of time. Respecting the
choice of the individual is central to any privacy regime, and a
fundamental component of FIPPs. In adopting section 222, Congress
imposed a duty on telecommunications carriers to protect the
confidentiality of their customers' information, and specifically
required that carriers obtain customer approval for use and sharing of
individually identifiable customer information. In adopting rules to
implement these statutory requirements, we look to the record, which
includes substantial discussion about customers' expectations in the
context of the broader Internet ecosystem, as well as existing
regulatory, enforcement, and best practices guidance. We are persuaded
that sensitivity-based choice rules are the best way to implement the
mandates of section 222, honor customer expectations, and provide
carriers the ability to engage their customers.
167. We therefore adopt rules that require express informed consent
(opt-in approval) from the customer for the use and sharing of
sensitive customer PI. As described in greater detail below, our rules
treat the following information as sensitive: Precise geo-location,
health, financial, and children's information; Social Security numbers;
content; and web browsing and application usage histories and their
functional equivalents. For voice providers, our rules also treat call
detail information as sensitive. With respect to non-sensitive customer
PI, carriers must, at a minimum, provide their customers the ability to
opt out of the carrier's use or sharing of that non-sensitive customer
information. Carriers must also provide their customers with an easy-
to-use, persistent mechanism to adjust their choice options. As
discussed below, we do not consider a carrier's sharing of customer PI
with the carrier's own agents to constitute sharing with third parties
that requires either opt-in or opt-out consent.
168. The sensitivity-based choice approach we adopt is not
monolithic. We recognize certain congressionally-directed exceptions to
customer approval rights. Most obviously, carriers can, and indeed
must, use and share customer PI in order to provide the underlying
telecommunications service, to bill and collect payment for that
service, and for certain other limited purposes by virtue of delivering
the service. Congress also recognized that there are other laws and
regulations that allow or require carriers to use and share customer PI
without consent. Therefore, we adopt exceptions to our choice framework
that allow carriers to use and share information for the
congressionally directed purposes outlined in the Communications Act,
and as otherwise required or authorized by law.
169. In the first part of this section, we discuss our application
of a sensitivity-based framework to the use and sharing of customer PI.
We explain what we consider to be sensitive customer PI, and how our
rules apply the sensitivity-based framework. In the second part of this
section, we explain and implement the limitations and exceptions to
that choice framework.
170. In the next parts of this section, we discuss the mechanisms
for customer approval provided for in our rules. We explain how and
when carriers must solicit and obtain customer approval to use and
share the customer's PI under the framework we adopt today, and require
carriers to provide customers with easy access to a choice mechanism
that is simple, easy-to-use, clearly and conspicuously disclosed,
persistently available, and made available at no additional cost to the
customer. Finally, we eliminate the requirements that
telecommunications providers keep particular records of their use of
customer PI and periodically report compliance to the Commission.
171. These rules apply both to BIAS and other telecommunications
services.
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The record reflects strong support for consistency between privacy
regimes for all telecommunications services, both to reduce possible
consumer confusion, and to decrease compliance burdens for all affected
telecommunications carriers, particularly small providers. Therefore,
within the scope of our authority over telecommunications carriers, we
apply these rules to all BIAS providers and other telecommunications
carriers.
1. Applying a Sensitivity-Based Customer Choice Framework
172. Except as otherwise provided by law and subject to the
congressionally-directed exceptions discussed below, we adopt a
customer choice framework that distinguishes between sensitive and non-
sensitive customer information. We adopt rules that require BIAS
providers and other telecommunications carriers to obtain a customer's
opt-in consent before using or sharing sensitive customer PI. We also
require carriers to obtain customer opt-in consent for material
retroactive uses of customer PI, as discussed below. We also adopt
rules requiring carriers to, at a minimum, offer their customers the
ability to opt out of the use and sharing of non-sensitive customer
information. Carriers may also choose to obtain opt-in approval from
their customers to use or share non-sensitive customer PI. To ensure
that consumers have effective privacy choices, we require carriers to
provide their customers with a persistent, easy-to-access mechanism to
opt in to or opt out of their carriers' use or sharing of customer PI.
173. In adopting a sensitivity-based framework, we move away from
the purpose-based framework--in which the purpose for which the
information will be used or shared determines the type of customer
approval required--in the current rules and in the rules we proposed in
the NPRM. Having sought comment on a sensitivity-based framework in the
NPRM, and having received substantial support for it in the record, we
find that incorporating a sensitivity element into our framework allows
our rules to be more properly calibrated to customer and business
expectations. This approach is also consistent with the framework
recommended by the FTC in its comments and its 2012 staff report, and
used by the FTC in its settlements. We make this transition for both
BIAS and other telecommunications services because the record
demonstrates that a sensitivity-based framework better reflects
customer expectations regarding how their privacy is handled by their
communications carriers.
174. Some commenters argue that all customer information is
sensitive, and that subjecting only certain information to opt-in
approval imposes an unnecessary burden on consumers who want to protect
the privacy of their information to opt-out. While we appreciate that
consumers are not monolithic in their preferences, as discussed below,
we think the rule we adopt today strikes the right balance and gives
consumers control over the use and sharing of their information. We
decline to conclude that all customer PI is sensitive by default, and
instead identify specific types of sensitive information, consistent
with the FTC. Other commenters express concern that drawing a
distinction between sensitive and non-sensitive information requires a
broadband provider to analyze a customer's web browsing history and
content to identify sensitive information, rendering the point of the
distinction moot. Some commenters argue that carriers can use a system
of whitelists to determine sensitive versus non-sensitive Web sites.
This argument mistakenly presumes that the sensitivity of a customer's
traffic relies upon the type or contents of the sites visited, and not
simply the fact of the customer having visited them. However, this
dispute and the concerns underlying it are themselves mooted by our
decision to treat content, browsing history, and application usage
history as sensitive and subject to opt-in consent. Thus, recognizing
customer expectations and the comments reflecting them in the record,
we adopt rules that base the level of approval carriers must obtain
from customers upon the sensitivity of the customer PI at issue.
175. Adopting this choice framework implements the requirement in
section 222(c)(1) that carriers, subject to certain exceptions, must
obtain customer approval before using, sharing, or permitting access to
individually identifiable CPNI. Further, we find that except where a
limitation or exception discussed below applies, obtaining consent
prior to using or sharing customer PI is a necessary component of
protecting the confidentiality of customer PI pursuant to section
222(a). We also observe that drawing distinctions that allow opt-out or
opt-in approval is well-grounded in our section 222 precedent and
numerous other privacy statutes and regimes. The Commission has long
held that allowing a customer to grant partial use of CPNI is
consistent with one of the underlying principles of section 222: To
ensure that customers maintain control over their own information.
176. Below, we explain the framework and its application. First, we
define the scope of sensitive customer PI and explain our reasons for
requiring opt-in consent to use or share sensitive customer PI.
Consistent with FTC enforcement work and best practices guidance, we
also require telecommunications carriers that seek to make retroactive
material changes to their privacy policies to obtain opt-in consent
from customers. Next, we discuss our reasons for allowing carriers to
use and share non-sensitive customer PI subject to opt-out approval.
a. Approval Requirements for the Use and Sharing of Sensitive Customer
PI
(i) Defining Sensitive Customer PI
177. For purposes of the sensitivity-based customer choice
framework we adopt today, we find that sensitive customer PI includes,
at a minimum, financial information; health information; Social
Security numbers; precise geo-location information; information
pertaining to children; content of communications; call detail
information; and a customer's web browsing history, application usage
history, and their functional equivalents. Although a carrier can be in
compliance with our rules by providing customers with the opportunity
to opt in to the use and sharing of these specifically identified
categories of information, we encourage each carrier to consider
whether it collects, uses, and shares other types of information that
would be considered sensitive by some or all of its customers, and
subject the use or sharing of that information to opt-in consent.
178. In identifying these categories as sensitive and subject to
opt-in approval, we draw on the record and consider the context, which
is the customer's relationship with his broadband or other
telecommunications provider. The record demonstrates strong support for
designating these specific categories of information as sensitive:
Health information, financial information, precise geo-location
information, children's information, and Social Security numbers. The
FTC explicitly regards these categories of information as sensitive, as
well. Despite some commenters' assertions to the contrary, the FTC does
not claim to define the outer bounds of sensitive information with this
list. For example, in its 2009 Staff Report on online behavioral
advertising and in its comments to this proceeding, the FTC clearly
indicated that its list was non-exhaustive. Furthermore, Commission
precedent and consumer expectations demonstrate
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strong support for certain additional categories of sensitive
information. For instance, the Commission has also afforded enhanced
protection to call detail information for voice services. Consumer
research also supports identifying several types of information as
sensitive: The 2016 Pew study, noted by a number of commenters in the
record, found that large majorities of Americans considered Social
Security numbers, health information, communications content (including
phone conversations, email, and texts), physical locations over time,
phone numbers called or texted, and web history to be sensitive. Each
of these categories has a clear and well attested case in the record
and in federal law for being considered sensitive.
179. Consistent with the FTC and the record, we conclude that
precise geo-location information is sensitive customer PI. Congress
specifically amended section 222 to protect the privacy of wireless
location information as the privacy impacts of it became clear. Real-
time and historical tracking of precise geo-location is both sensitive
and valuable for marketing purposes due to the granular detail it can
reveal about an individual. Such data can expose ``a precise,
comprehensive record of a person's public movements that reflects a
wealth of detail about her familial, political, professional,
religious, and sexual associations.'' In some cases, a BIAS provider
can even pinpoint in which part of a store a customer is browsing. The
FTC has found that precise geo-location data ``includ[es] but [is] not
limited to GPS-based, WiFi-based, or cell-based location information.''
As noted above in paragraph 66, we do not draw distinctions between
technologies used to determine precise geo-location. We make clear,
however, that we do not consider a customer's postal or billing address
to be sensitive precise geo-location information, but rather to be non-
sensitive customer PI when used in context as customer contact
information.
180. The record also reflects the historical and widely-held tenet
that the content of communications is particularly sensitive. Like
financial and health information, Congress recognized communications as
being so critical that their content, information about them, and even
the fact that they have occurred, are all worthy of privacy
protections. This finding is strongly supported by the record, and
consistent with FTC guidance. As the FTC explains, ``content data can
be highly personalized and granular, allowing analyses that would not
be possible with less rich data sets.'' We therefore concur with the
large number of commenters who assert that content must be protected
and agree with Access Now in finding that ``the use or sharing . . . of
the content of user communications is a clear violation of the right to
privacy.'' As such, we consider communications contents to be sensitive
information. Designating content as sensitive customer PI will not,
despite NCTA's concerns, require a carrier to obtain additional
customer approval to accept or respond to communications with its
customers.
181. We also add to the list of sensitive customer PI a customer's
web browsing and application usage history, and their functional
equivalents. A customer's web browsing and application usage history
frequently reveal the contents of her communications, but also
constitute sensitive information on their own--particularly considering
the comprehensiveness of collection that a BIAS provider can enjoy and
the particular context of the BIAS provider's relationship with the
subscriber. The Commission has long considered call detail information
sensitive, regardless of whether a customer called a restaurant, a
family member, a bank, or a hospital. The confidentiality of that
information, and its sensitivity, do not rely upon what category of
entity the customer is calling. The same is true of a customer's web
browsing and application usage histories. We therefore decline to
define a subset of non-sensitive web browsing and application usage
history, as a number of commenters urge. Some commenters raise the
issue of cases drawing distinctions between ``content'' and
``metadata'' in the context of ECPA as standing for the proposition
that all non-content data is non-sensitive. We disagree. While the text
of ECPA requires a court to make determinations of what is and is not
``content'' of communications to determine that statute's
applicability, neither the statute nor the case law interpreting it
suggests that information other than content cannot be considered
sensitive under the Communications Act.
182. Web browsing and application usage history, and their
functional equivalents are also sensitive within the particular context
of the relationship between the customer and the BIAS provider, in
which the BIAS provider is the on-ramp to the Internet for the
subscriber and thus sees all domains and IP addresses the subscriber
visits or apps he or she uses while using BIAS. This is a different
role than even the large online ad networks occupy--they may see many
sites a subscriber visits, but rarely see all of them. The notion is
that before a BIAS provider tracks the Web sites or other destinations
its customer visits the customer should have the right to decide
upfront if he or she is comfortable with that tracking for the purposes
disclosed by the provider.
183. As EFF explains, BIAS providers can acquire a lot of
information ``about a customer's beliefs and preferences--and likely
future activities--from Web browsing history or Internet usage history,
especially if combined with port information, application headers, and
related information about a customer's usage or devices.'' For
instance, a user's browsing history can provide a record of her reading
habits--well-established as sensitive information--as well as
information about her video viewing habits, or who she communicates
with via email, instant messaging, social media, and video and voice
tools. The cable and satellite privacy provisions of the Act were
created in significant part to protect the privacy of video viewing
habits. Video rental records have also been recognized by Congress as
worthy of particular privacy protection. As such, we disagree with
Google's assertions that web browsing has not traditionally been
considered sensitive information. Furthermore, the domain names and IP
addresses may contain potentially detailed information about the type,
form, and content of a communication between a user and a Web site. In
some cases, this can be extremely revealing: For instance, query
strings within a URL may include the contents of a user's search query,
the contents of a web form, or other information. Browsing history can
easily lead to divulging other sensitive information, such as when and
with what entities she maintains financial or medical accounts, her
political beliefs, or attributes like gender, age, race, income range,
and employment status. More detailed analysis of browsing history can
more precisely determine detailed information, including a customer's
financial status, familial status, race, religion, political leanings,
age, and location. The wealth of information revealed by a customer's
browsing history indicates that it, even apart from communications
content, deserves the fullest privacy protection.
184. Web browsing, however, is only one form of sensitive
information about a customer's online activities. The use of other
applications besides web browsers also provides a significant amount of
insight into a user's behavior. Any of the information transmitted to
and from a customer via a browser can
[[Page 87299]]
just as easily be transmitted via a company-specific or use-specific
application. Whether on a mobile device or a desktop computer, the
user's newsreader application will give indications of what he is
reading, when, and how; an online video player's use will transmit
information about the videos he is watching in addition to the video
contents themselves; an email, video chat, or over-the-top voice
application will transmit and receive not only the messages themselves,
but the names and contact information of his various friends, family,
colleagues, and others; a banking or insurance company application will
convey information about his health or finances; even the mere
existence of those applications will indicate who he does business
with. A customer using ride-hailing applications, dating applications,
and even games will reveal information about his personal life merely
through the fact that he uses those apps, even before the information
they contain (his location, his profile, his lifestyle) is viewed.
185. Considering the particular visibility of this information to
telecommunications carriers, we therefore find that web browsing
history and application usage history, and their functional
equivalents, are sensitive customer PI. We do not take a position on
how sensitive this information would be in other contexts, or what
levels of customer approval would be appropriate in those
circumstances. Web browsing history and application usage history
includes information from network traffic related to web browsing or
other applications (including the application layer of such traffic),
and information from network traffic indicating the Web site or party
with which the consumer is communicating (e.g., their domains and IP
addresses). We include their functional equivalents to ensure that the
privacy of customers' online activities (today most frequently
encompassed by browsing and application usage history) will be
protected regardless of the specific technology or architecture used.
We expect this to be particularly significant as the Internet of Things
continues to develop. While a customer may expect that the people and
businesses she interacts with will know some things about her--her
bookstore will know what she's bought by virtue of having sold it to
her--this is distinct from having her voice or broadband provider
extract that information from her communications paths and therefore
knowing every store she has visited and everything she has purchased.
Furthermore, as mentioned above, a carrier not only has the technical
ability to access the information about the customer's calls to the
bookstore or visits to its Web site; it could also, unlike the store,
associate that information with the customer's other communications.
Edge providers, even those that operate ad networks, simply do not have
sufficient access to an individual to put together such a comprehensive
view of a consumer's online behavior. And, to the extent a customer
wants to prevent edge providers from collecting information about her,
she can adopt a number of readily available privacy-enhancing
technologies. While the knowledge of any one fact from a customer's
online history (the use of an online app) may be known to several
parties (including the BIAS provider, the app itself, the server of an
in-app advertisement), the BIAS provider has the technical ability to
access the most complete and most unavoidable picture of that history.
We therefore disagree with commenters who believe that browsing history
or application usage are not sensitive in the context of the customer/
BIAS provider relationship.
186. Also, contrary to some commenters' arguments, the existence of
encryption on Web sites or even in apps does not remove browsing
history from the scope of sensitive information. As noted above,
encryption is far from fully deployed; the volume of encrypted data
does not represent a meaningful measure or privacy protection; and
carriers have access to a large and broad amount of user data even when
traffic is encrypted, including, frequently, the domains and IP
addresses that a customer has visited. Comcast notes that few dispute
on the record that a growing volume of traffic is encrypted. However,
the volume of encrypted data is not indicative of how much customer
privacy is protected. For instance, a very small amount of browsing
information can reveal that a customer is visiting a site devoted to a
particular disease, while many times that data, unencrypted, would only
reveal that the user had streamed a particular video. Comcast argues
that because BIAS providers are limited to this information, they have
less access to information overall. While the record indicates that
BIAS providers have a less granular view of encrypted web traffic than
unencrypted, it does not change the breadth of the carrier's view or
the fact that it acquires this information by virtue of its privileged
position as the customer's conduit to the internet. Nor does it change
the fact that this still constitutes a record of the customer's online
behavior, which, as noted above, can reveal details of a customer's
life even at the domain level.
187. In deciding to treat broadband customers' web browsing
history, application history, and their functional equivalents as
sensitive information, we agree with commenters, including technical
experts, who explain that attempting to neatly parse customer data
flowing through a network connection into sensitive and non-sensitive
categories is a fundamentally fraught exercise. As a number of
commenters have noted, a network provider is ill-situated to reliably
evaluate the cause and meaning of a customer's network usage. We
therefore disagree with the suggestion made by some commenters that web
browsing is not sensitive, because providers have established methods
of sorting data which do not require them to ``manually inspect'' the
contents of packets.
188. This remains true even when providers do not attempt to
classify customers' browsing and application usage as they use BIAS,
but instead employ blacklists or whitelists of sensitive or non-
sensitive sites and applications. Although commenters cite various
industry attempts to categorize consumer interests, and identify the
sensitive categories among those, the definitions vary significantly
between them. Even within one set of classifications, the lines between
what is and is not considered sensitive information can be difficult to
determine. For instance, as Common Sense Kids Action points out,
determining when browsing information belongs to a child, teen, or
adult customer or user would require more than knowing the user's
online destination. Further, as OTI notes, something that is non-
sensitive to a majority of people may nevertheless be sensitive to a
minority, which may have the unintended consequence of disparately
impacting the privacy rights of racial and ethnic minorities and other
protected classes. By treating all web browsing data as sensitive, we
give broadband customers the right to opt in to the use and sharing of
that information, while relieving providers of the obligation to
evaluate the sensitivity and be the arbiter of any given piece of
information.
189. We also observe that treating web browsing and application
usage history as sensitive in the context of the BIAS/customer
relationship is consistent with industry norms among BIAS providers.
Until recently, for example, to participate in AT&T's GigaPower Premium
Offer (i.e., to receive the fixed
[[Page 87300]]
broadband service GigaPower at a lower cost), customers had to opt in
to AT&T Internet Preferences. Under AT&T's Internet Preferences, ``you
agree to share with us your individual browsing, like the search terms
you enter and the Web pages you visit, so we can tailor ads and offers
to your interests.'' AT&T explained that ``AT&T Internet Preferences
works independently of your browser's privacy settings regarding
cookies, do-not-track and private browsing'' and that ``[i]f you opt-in
to AT&T Internet Preferences, AT&T will still be able to collect and
use your Web browsing information independent of those settings.'' In
short, AT&T appears to have tracked web browsing history only pursuant
to customer opt-in. Similarly, participation in Verizon's Verizon
Selects program is on an opt-in basis. That opt-in program uses web
browsing and application usage data, along with location, to develop
marketing information about its customers. We provide these examples
only to demonstrate that BIAS providers already treat web browsing and
application usage history as sensitive and as subject to opt-in
consent, and we do not mean to suggest that these existing or past
programs are reasonable or consistent with the rules and standards we
discuss in this Order.
190. We disagree with the assertions made by a number of
advertising trade associations that web browsing history should not be
considered sensitive customer PI because courts have ``found that the
advertising use of web browsing histories tied to device information
does not harm or injure consumers.'' We find this to be inapposite to
the task we confront in applying Section 222 of the Act. These cases
deal with a factually different, and significantly narrower, scenarios
than we address through web browsing history in this Order. For
instance, in both cases, the courts found that plaintiffs had failed to
allege that they had suffered ``loss'' as that term is narrowly defined
under the Computer Fraud and Abuse Act. We do not adopt the CFAA's
definitions of ``damage'' or ``loss'' for the purposes of this Order.
191. We recognize that there are other types of information that a
carrier could add to the list of sensitive information, for example
information that identifies customers as belonging to one or more of
the protected classes recognized under federal civil rights laws.
Commenters also describe as sensitive other forms of governmental
identification, biometric identifiers, and electronic signatures. Other
privacy frameworks, both governmental and commercial, identify other
types of information as particularly sensitive, such as race, religion,
political beliefs, criminal history, union membership, genetic data,
and sexual habits or sexual orientation. Most of these categories
already overlap with our established categories, or the use or sharing
of such information would be subject to opt-in requirements pursuant to
the requirement to obtain opt-in consent for the use and sharing of
content and web browsing and application usage history. Moreover, as
explained above, carriers are welcome to give their customers the
opportunity to provide opt-in approval for the use and sharing of
additional types of information. However, we recognize that as
technologies and business practices evolve, the nature of what
information is and is not sensitive may change, and as customer
expectations or the public interest may require us to refine the
categories of sensitive customer PI, we will do so. For instance, some
commenters have suggested that information considered non-sensitive at
one point might reveal through later analysis information about
protected classes.
(ii) Opt-In Approval Required for Use and Sharing of Sensitive Customer
PI and Retroactive Material Changes in Use of Customer PI
192. As the FTC recognizes, ``the more sensitive the data, the more
consumers expect it to be protected and the less they expect it to be
used and shared without their consent.'' We therefore require BIAS
providers and other telecommunications carriers to obtain a customer's
opt-in consent before using, disclosing, or permitting access to his or
her sensitive customer PI, except as otherwise required by law and
subject to the other exceptions outlined in Part III.D.2.
193. Consistent with the Commission's existing CPNI rules and wider
precedent, opt-in approval requires that the carrier obtain
affirmative, express consent from the customer for the requested use,
disclosure, or access to the customer PI. Because section 222(a)
requires protection of the confidentiality of all customer PI, we
include all types of sensitive customer PI, and not just sensitive,
individually identifiable CPNI, within the definition of opt-in
approval. The broad support in the record for protecting sensitive
information nearly unanimously argues that use and sharing of sensitive
customer information be subject to customer opt-in approval. The record
demonstrates that customers expect that their sensitive information
will not be shared without their affirmative consent, and sensitive
information, being more likely to lead to more serious customer harm,
requires additional protection. For instance, the FTC recognizes that
consumer expectations drive increased protections for sensitive
information. We find that requiring opt-in approval for the use and
sharing of sensitive customer PI reasonably balances burdens between
carriers and their customers. If a carrier's uses or sharing of
customers' sensitive personal information benefits those customers, the
customer has every incentive to make that choice, and the carrier has
every incentive to make the benefits of that choice clear to the
customer. We anticipate that this will increase the amount of clear and
informative information that customers will have about the costs and
benefits of participation in these programs. Carriers' incentives to
encourage customer opt-in will likely be tempered by carriers' desire
to avoid alienating customers with too-frequent solicitations to opt
in.
194. In contrast, we find that opt-out consent would be
insufficient to protect the privacy of sensitive customer PI. Research
has shown that default choices can be ``sticky,'' meaning that
consumers will remain in the default position, even if they would not
have actively chosen it. Further, opt-in regimes provide additional
incentives for a company to invest in making notices clear,
conspicuous, comprehensible, and direct. Additionally, empirical
evidence shows that relatively few customers opt out even though a
larger number express a preference not to share their information,
suggesting that they did not receive notice or were otherwise
frustrated in their ability to exercise choice. In an opt-in scenario,
however, we anticipate that many consumers, solicited by carriers
incentivized to provide and improve access to their notice and choice
mechanisms, will wish to affirmatively exercise choice options around
the use and sharing of sensitive information. Although we recognize
that opt-in imposes additional costs, based on these factors we find
that opt-in is warranted to maximize opportunities for informed choice
about sensitive information.
195. Material Retroactive Changes. Notwithstanding the fact that
our choice framework generally differentiates between sensitive and
non-sensitive information, we agree with the FTC and other commenters
that material retroactive changes require a customer's opt-in consent
for changes to the use and sharing of both sensitive and non-sensitive
information. The record demonstrates widespread conviction
[[Page 87301]]
that material retroactive changes to privacy policies should require
opt-in approval from customers. Retroactive changes in privacy policies
particularly risk violating customers' privacy expectations because
they result in a carrier using or sharing information already collected
from a customer for one purpose or set of purposes for a different
purpose. Because of this, we require that telecommunications carriers
obtain customers' opt-in approval before making retroactive material
changes to privacy policies. It is a ``bedrock principle'' of the FTC
that ``companies should provide prominent disclosures and obtain
affirmative express consent before using data in a manner materially
different than claimed at the time of collection.'' This means that,
whether customer PI is sensitive or non-sensitive, a telecommunications
carrier must obtain opt-in permission if it wants to use or share data
that it collected before the time that the change was made. For
instance, if a carrier wanted to change its policy to share a
customer's past monthly data volumes with third party marketers, it
would need to obtain the customer's opt-in permission. In contrast, if
the carrier changes its policy to share the customer's future monthly
data volumes with those same marketers, it would only need the
customer's opt-out consent.
b. Approval Requirements for the Use and Sharing of Non-Sensitive
Customer PI
196. We recognize that customer concerns about the use and sharing
of their non-sensitive customer PI will be less acute than sharing of
sensitive PI, and that there are significant benefits to customers and
to businesses from some use and sharing of non-sensitive customer PI.
However, we reject suggestions that consumers should be denied choice
about the use and sharing of any of their non-sensitive information.
Empowering consumers by providing choice is a standard component of
privacy frameworks. Further, ensuring choice is necessary as a part of
effectuating the duty to protect the confidentiality of customer PI
under section 222(a) and the duty to obtain the approval of the
customer before using, disclosing, or permitting access to individually
identifiable CPNI under section 222(c)(1). Therefore, consistent with
the FTC privacy framework, we require BIAS providers and other
telecommunications carriers to obtain the customer's opt-out approval
to use, disclose, or permit access to non-sensitive customer PI. We
note that our requirements for customer opt-out approval serve as a
floor, not a ceiling, to the level of customer approval to be provided.
Thus, a carrier may set up its programs to solicit and receive customer
opt-in approval if it so chooses.
197. We define opt-out approval as a means for obtaining customer
consent to use, disclose, or permit access to the customer's
proprietary information under which a customer is deemed to have
consented to the use, disclosure, or access to the customer's covered
information if the customer has failed to object thereto after the
carrier's request for consent. This definition, based on the existing
CPNI voice rules, applies to all non-sensitive customer PI for all
covered telecommunications carriers. The current CPNI rules define opt-
out approval to require a thirty-day waiting period before a carrier
can consider a customer's opt-out approval effective. We eliminate this
requirement, and similarly decline to apply it to BIAS providers or
other telecommunications carriers. As borne out in the record, we find
that requiring carriers to enable customers to opt out at any time and
with minimal effort will reduce the likelihood that customers' privacy
choices would not be respected. As such, we believe that the 30-day
waiting period is no longer necessary and provide additional regulatory
flexibility by eliminating it. We make clear, however, that while we do
not adopt a specific timeframe for effectuating customers' opt-out
approval choices, we do not expect carriers to assume that a customer
has granted opt-out consent when a reasonable customer would not have
had an opportunity to view the solicitation. We conclude that this
flexible standard will appropriately account for the faster pace of
electronic transactions, while preventing carriers from using customer
PI before customers have had the opportunity to opt out.
198. We agree with commenters who assert that non-sensitive
information naturally generates fewer privacy concerns for customers,
and as such does not require the same level of customer approval as for
sensitive customer PI. From this, we conclude that an opt-out approval
regime for use and sharing of non-sensitive customer PI would likely
meet customers' privacy expectations. We agree with ANA that ``[a]n
opt-out framework for uses of non-sensitive information also matches
consumers' expectations regarding treatment of their data,'' and CTIA
that ``[b]y tying its rules to the sensitivity of the data, the
Commission will ensure that they align with consumer expectations and
what consumers know to be fair.'' While an opt-out regime places a
greater burden than an opt-in regime upon customers who do not wish for
their carrier to use or share their non-sensitive information, research
suggests that those same customers will likely be more motivated to
actively exercise their opt-out choices. Further, we conclude that
permitting carriers to use and share non-sensitive data with customers'
opt-out approval--rather than opt-in approval--grants carriers
flexibility to make improvements and innovations based on customer PI.
For example, ACA notes that an opt-out framework can allow ``providers,
including small providers, to explore, market, and deploy innovative,
value-added services to their consumers, including home security and
home automation services that will drive the `Internet of Things.' ''
Thus, we reject arguments that ``opt-out is not an appropriate
mechanism to obtain user approval'' in any circumstances.
199. We disagree with commenters who assert that customer approval
to use and share customer PI for the purposes of all first party
marketing is generally implied in Section 222. We find that allowing
carriers to use or share customer PI for all first party marketing does
not comport with section 222's customer approval and data protection
requirements. Section 222(c)(1) explicitly requires customer approval
to use and share CPNI for purposes other than providing the
telecommunications service, and subject to certain other limited
exceptions. Likewise, section 222(a) imposes a duty on carriers to
protect the confidentiality of customer PI. We conclude that permitting
carriers to use and share customer PI to market all carrier and
affiliate services based on inferred customer approval is inconsistent
with these statutory obligations. Our conclusion is also consistent
with Commission precedent and FTC Staff comments. This same rationale
applies to other telecommunications carriers. We note that, as
discussed below, limited types of first-party marketing (of categories
of service to which a customer subscribes, and services necessary to,
or used in, those services) do not require customer approval. While
some comments assert that customers expect some degree of targeted
marketing absent explicit customer approval, the record also indicates
that customers expect choice with regard to the privacy of their online
communications. Inferring consent for all first-party marketing would
leave consumers without the right to opt out of receiving any manner of
marketing from their telecommunications carrier--
[[Page 87302]]
violating that basic precept recognized by Justice Louis Brandeis of
the ``right of the individual to be let alone.'' We accordingly adopt
an opt-out regime for first-party marketing that relies on non-
sensitive customer PI to fulfill Section 222 and provide customers with
the choice that they desire without unduly hindering the marketing of
innovative services.
200. Giving consumers control of the use and disclosure of their
information, even for first-party marketing, is consistent with other
consumer protection laws and regulations adopted by both the FTC and
FCC. For instance, the popular and familiar National Do Not Call
registry, created by the FTC, the FCC, and the states empowers
consumers to opt out of most telemarketing calls. Consumers have
registered over 222 million phone numbers with the Do Not Call Registry
in order to stop unwanted marketing calls. Also, pursuant to rules
adopted by both the FTC and the FCC, consumers to have the right to opt
out of receiving calls even from companies with which they have a prior
business relationship, with businesses required to place the consumer
on a do-not-call list upon the consumer's request. The CAN SPAM Act of
2003, and the rules the FTC adopted under CAN SPAM, also give consumers
the right to opt out of the receipt of future commercial email from and
require senders of commercial email to provide a working mechanism in
their email to facilitate those opt-outs. Our rules follow these many
models.
2. Congressionally-Recognized Exceptions to Customer Approval
Requirements for Use and Sharing of Customer PI
201. In this section, we detail the scope of limitations and
exceptions to the customer approval framework discussed above. In the
first part of this section, based on our review of the record and our
analysis of the best way to implement section 222, we find that no
additional customer consent is needed in order for a BIAS provider or
other telecommunications carrier to use and share customer PI in order
to provide the telecommunications service from which such information
is derived or provide services necessary to, or used in, the provision
of such telecommunications service. These limitations on customer
approval requirements allow a variety of necessary activities beyond
the bare provision of services, including research to improve or
protect the network or telecommunications, and limited first-party
marketing of services that are part of, necessary to, or used in the
provision of the telecommunications service. In the second part of this
section, we apply the statutory exceptions detailed in section 222(d)
to all customer PI, allowing telecommunications carriers to use and
share customer PI to: (1) Initiate, render, bill, and collect for
telecommunications services; (2) protect the rights or property of the
carrier, or to protect users and other carriers from fraudulent,
abusive, or unlawful use of, or subscription to, telecommunications
services; (3) provide any inbound telemarketing, referral, or
administrative services to the customer for the duration of a call; and
(4) provide customer location information and non-sensitive customer PI
in certain specified emergency situations. We also take this
opportunity to clarify that our rules do not prevent use and sharing of
customer PI to the extent such use or sharing is allowed or required by
other law.
202. The statutory mandate of confidentiality is not an edict of
absolute secrecy. The need to use and share customer information to
provide telecommunications services, to initiate or render a bill, to
protect the network, and to engage in the other practices identified
above are inherent in a customer's subscription. While Congress
specified this in the context of its more detailed provisions on
customer approval for CPNI in sections 222(c)-(d), it left to the
Commission the details of determining the scope of the duty of
confidentiality. We therefore exercise our authority to adopt
implementing rules in order to harmonize the application in our rules
of section 222(a) as to customer PI with the limitations and exceptions
of sections 222(c)-(d). Doing so ensures that carriers are not burdened
with disparate or duplicative approval requirements based upon whether
a particular piece of information is classified as CPNI, PII, or both.
We disagree with commenters who argue that extending these limitations
and exceptions to approval requirements unduly risk customers' privacy.
We make clear that carriers using or sharing customer PI should remain
particularly cognizant of their obligation to comply with the data
security standards in Part III.E, below. We also emphasize that
carriers should be particularly cautious about using sensitive customer
PI, especially the content of communications, and carriers should
carefully consider whether its use is necessary before making use of it
subject to these limitations and exceptions. Furthermore, we observe
that BIAS providers and other telecommunications carriers remain
subject to all other applicable laws and regulations that affect their
collection, use, or disclosure of communications, including but not
limited to, the Electronic Communications Privacy Act (ECPA), the
Communications Assistance for Law Enforcement Act (CALEA), section 705
of the Communications Act, and the Cybersecurity Information Sharing
Act (CISA).
a. Provision of Service and Services Necessary to, or Used in,
Provision of Service
203. Section 222 makes clear that no additional customer consent is
needed to use customer PI to provide the telecommunications service
from which it was derived, and services necessary to, or used in the
telecommunications service. Consent to use customer PI for the
provision of service is implied in the service relationship. We note
that the need for providers to transmit and disclose certain types of
customer PI (including IP addresses and the contents of communications)
in the course of providing service in no way obviates customers'
privacy interests in this information. Customers expect their
information to be used in the provision of service--after all,
customers fully intend for their communications to be transmitted to
and from recipients--and they necessarily give their information to the
carrier for that purpose. For instance, a number of commenters objected
to our inclusion of IP addresses as forms of customer PI, because they
are necessary to route customers' communications, or otherwise provide
telecommunications service. This concern is misplaced; while a BIAS
provider needs to share its customer's IP address to provide the
broadband service, there is no basis to share that information for
other non-exempt purposes absent customer consent. Indeed, because of
the explicit limitation described by section 222(c)(1)(A) and
implemented here, we do not need to exclude IP addresses or other forms
of information from the scope of customer PI in order to allow the
provision of telecommunications service, or services necessary to or
used in providing telecommunications service. Thus, we import these
statutory mandates into our rules and apply them to all customer PI.
204. We continue to find, as did previous Commissions, that
telecommunications customers expect their carriers to market them
improved service offerings within the scope of service to which they
already subscribe, and as such, conclude that such limited first-party
marketing is part of the provision of the telecommunications
[[Page 87303]]
service within the meaning of Section 222(c)(1)(A). As with earlier
CPNI orders, we decline to enumerate a definitive list of ``services
necessary to, or used in, the provision of . . . telecommunications
service'' within the meaning of section 222(c)(1). However, we provide
guidance with respect to certain services raised in the record, and
specifically find that this exception includes the provision and
marketing of communications services commonly bundled together with the
subscriber's telecommunications service, customer premises equipment,
and services formerly known as ``adjunct-to-basic services.'' We
further find that the provision of inside wiring and technical support;
reasonable network management; and research to improve and protect the
network or the telecommunications either fall within this category or
constitute part of the provision of telecommunications service.
205. Services that are Part of, Necessary to, or Used in the
Provision of Telecommunications Service. The Commission has
historically recognized that, as a part of providing service, carriers
may, without customer approval, use and share CPNI to market service
offerings among the categories of service to which the customer already
subscribes. We therefore adopt a variation of our proposal, which
mirrored the existing rule, and permit telecommunications carriers to
infer approval to use and share non-sensitive customer PI to market
other communications services commonly marketed with the
telecommunications service to which the customer already subscribes.
For example, the carrier could infer consent to market voice (whether
fixed and/or mobile) and video service to a customer of its broadband
Internet access service. We limit this exception to the use and sharing
of non-sensitive information, because we agree with a number of
commenters that this type of marketing remains part of what customers
expect from their telecommunications carrier when subscribing to a
service. For example, under our rules, a BIAS provider can offer
customers new or different pricing or plans for the customers' existing
subscriptions (e.g., a carrier may, without the customer's approval,
use the fact that the customer regularly reaches a monthly usage cap to
market a higher tier of service to the customer). This exception also
allows carriers to conduct internal analyses of non-sensitive customer
PI to develop and improve their products and services and to develop or
improve their offerings or marketing campaigns generally, apart from
using the customer PI to target specific customers.
206. The Commission also has historically recognized certain
functions offered by telecommunications carriers as inherently part of,
or necessary to, or used in, the provision of telecommunications
service. Consistent with Commission precedent, we reaffirm that
services formerly known as ``adjunct-to-basic,'' including, but not
limited to, speed dialing, computer-provided directory assistance, call
monitoring, call tracing, call blocking, call return, repeat dialing,
call tracking, call waiting, caller ID, call forwarding, and certain
centrex features, are either part of the provision of
telecommunications service or are ``necessary to, or used in'' the
provision of that telecommunications service. Similarly, the Commission
has, in prior orders, recognized that the provision and marketing of
certain other services as being ``necessary to, or used in'' the
provision of service, such as call answering, voice mail or messaging,
voice storage and retrieval services, fax storage and retrieval
services, and protocol conversion, and we continue to do so today. In
the 2015 Open Internet Order, we concluded that DNS, caching, and
network-oriented, security-related blocking functions including
parental controls and firewalls fall within the telecommunications
systems management exception and are akin to adjunct-to-basic services.
Likewise, we continue to find that CPE, as well as other customer
devices, inside wiring installation, maintenance, and repair, as well
as technical support, serve as illustrative examples of services that
are either part of the telecommunications service or are ``necessary
to, or used in'' the provision of the underlying telecommunications
service for the purposes of these rules. In each case here and below,
whether the particular function is a part of the telecommunications
service or a separate service ``necessary to, or used in'' the
telecommunications service may depend on the particular circumstances
of the underlying telecommunications service and the customer, and we
need not address this distinction to determine that the statutory
limitation applies. Customers require working inside wiring to receive
service, and often depend upon technical support to fully utilize their
services. As such, carriers may use and share non-sensitive customer
PI, without additional customer approval, to provide and market such
services.
207. In importing these historical findings into the rules we adopt
today and applying them to the current telecommunications environment,
we make clear that our rules no longer permit CMRS providers to use or
share customer PI to market all information services without customer
approval. In first making these findings, the Commission noted the
potential to revisit this decision if it became apparent that customer
expectations, and the public interest, changed. The 1999 CPNI
Reconsideration Order interpreted section 222(c)(1) as permitting CMRS
providers to market information services in general to their customers
without customer approval, but limited the information services for
which wireline carriers could infer approval. That decision was made
when the mobile information services market was in its infancy. As the
third party mobile application market has developed, we can no longer
find that such an exception is consistent with giving consumers
meaningful choice over the use and sharing of their information.
Moreover, we have a strong interest in our rules being technologically
neutral.
208. Reasonable Network Management. We agree with commenters
asserting that BIAS providers need to use customer PI to engage in
reasonable network management. We have previously explained that a
network practice is ``reasonable if it primarily used for and tailored
to achieving a legitimate network management purpose, taking into
account the particular network architecture and technology of the
broadband service.'' As we further elaborated in the 2015 Open Internet
Order, reasonable network management includes, but is not limited to
network management practices that are primarily used for, and tailored
to, ensuring network security and integrity, including by addressing
traffic that is harmful to the network; network management practices
that are primarily used for, and tailored to, addressing traffic that
is unwanted by end users; and network practices that alleviate
congestion without regard to the source, destination, content,
application, or service. We recognize that reasonable network
management plays an important role in providing BIAS, and consider
reasonable network management to be part of the telecommunications
service or ``necessary to, or used in'' the provision of the
telecommunications service. As such, we clarify that BIAS providers may
infer customer approval to use, disclose, and permit access to customer
PI to the extent necessary for reasonable
[[Page 87304]]
network management, as we defined that term in the 2015 Open Internet
Order.
209. Research to Improve and Protect Networks or
Telecommunications. We also find that certain uses and disclosures of
customer PI for the purpose of conducting research to improve and
protect networks or telecommunications are part of the
telecommunications service or ``necessary to, or used in'' the
provision of the telecommunications service for the purposes of these
rules. Since telecommunications carriers must be able to provide secure
networks to their customers, we include security research within the
scope of research allowed under this limitation. Security research also
falls under the exception covered in Part III.D.2.b, infra, regarding
uses of customer PI to protect the rights and property of a carrier, or
to protect users from fraud, abuse, or unlawful use of the networks.
For instance, Professor Feamster explains that ``network research
fundamentally depends on cooperative data sharing agreements with
ISPs,'' and that, lack of access to certain types of customer PI,
``will severely limit vendors' and developers' ability to build and
deploy network technology that functions correctly, safely, and
securely.'' Comcast also emphasizes the need to share customer PI with
``trusted vendors, researchers, and academics . . . under strict
confidentiality agreements . . . to improve both the integrity and
reliability of the service.'' NCTA also argues that carriers must be
able to use customer data for internal operational purposes such as
improving network performance. Some commenters, such as CDT, caution
that a research exemption, read too broadly, might permit privacy
violations. We share these concerns, and emphasize that in the interest
of protecting the confidentiality of customer PI, carriers should seek
to minimize privacy risks that may stem from using and disclosing
customer PI for the purpose of research, and should ensure that the
entities to which they disclose customer PI will likewise safeguard
customer privacy. Telecommunications carriers and researchers should
design research projects that incorporate principles of privacy-by-
design, and agree not to publish or otherwise publicly share
individually identifiable data without customer consent. This would
include, for instance, practicing data minimization and not using more
identifiable information than necessary for the research task. In
addition, the existing rules permit CMRS providers to infer customer
approval to use and share CPNI for the purpose of conducting research
on the health effects of CMRS. We retain this limited provision,
extending it to all customer PI. We reiterate that that carriers should
endeavor to minimize privacy risks to customers.
b. Specific Exceptions
210. In addition to the activities included in the provision of
service and services necessary to, or used in, provision of service,
carriers do not need to seek customer approval to engage in certain
specific activities that represent important policy goals detailed in
section 222(d). We apply those exceptions to the customer approval
framework to all customer PI.
211. Initiate, Render, Bill, and Collect for Service. We import
into our rules and apply to all customer PI the statutory exception
permitting carriers to use, disclose, and permit access to CPNI ``to
initiate, render, bill, and collect for telecommunications services''
without obtaining additional customer consent. As the Rural Wireless
Association explains, carriers frequently need to share ``certain
customer information'' ``with billing system vendors, workforce
management system vendors, consultants that assist with certain
projects, help desk providers, and system monitoring solutions
providers.'' Also, as noted below, to the extent that the carrier is
using an agent to perform acts on its behalf, the carrier's agents,
acting in the scope of their employment, stand in the place of the
carrier, both in terms of rights and liabilities.
212. Protection of Rights and Property. We also import into our
rules and apply to all customer PI the statutory provision permitting
carriers to use, disclose, and permit access to CPNI ``to protect the
rights or property of the carrier, or to protect users of those
services and other carriers from fraudulent, abusive, or unlawful use
of, or subscription to, such services'' without obtaining specific
customer approval. We agree with the broad set of commenters who
expressed the opinion that this exception should be incorporated into
the rules, and further agree that it should also apply to customer PI
beyond CPNI. We also find that these rules comport with the
Cybersecurity Information Sharing Act of 2015 (CISA), which permits
certain sharing of cyber threat indicators between telecommunications
providers and the federal government or private entities,
``notwithstanding any other provision of law.'' We do not assume that
the scope of our exception is coterminous with the definition of cyber
threat information in CISA. As noted, however, to the extent
information is allowed to be shared pursuant to CISA, our rules do not
inhibit such sharing. Moreover, to the extent that other federal laws,
such as CISA, permit or require use or sharing of customer PI, our
rules expressly do not prohibit such use or sharing.
213. We also agree with commenters that this provision of our rules
encompasses the use and sharing of customer PI to protect against spam,
malware such as viruses, and other harmful traffic, including
fraudulent, abusive, or otherwise unlawful robocalls. As proposed, this
includes any form of customer PI, not merely calling party phone
numbers. We caution that carriers using or sharing customer PI pursuant
to this section of the rules should remain vigilant about limiting such
use and sharing to the purposes of protecting their networks and users,
and complying with their data security requirements. We acknowledge
Access Now's concern that an overbroad reading of this exception could
result in carriers actively and routinely monitoring and reporting on
customers' behavior and traffic, and make clear that the rule does not
allow carriers to share their customers' information wholesale on the
possibility that doing so would enhance security; use and sharing of
customer PI for these purposes must be reasonably tailored to
protecting the network and its users.
214. We agree with commenters that recommend that we consider this
provision of our rules to encompass not only actions taken to combat
immediate security threats, but also uses and sharing to research and
develop network and cybersecurity defenses. When combined with the
immunity granted by CISA, this exception addresses carriers' concerns
about participating in cybersecurity sharing initiatives. As noted
above, CISA permits the sharing of cybersecurity threat indicators
``notwithstanding any other provision of law.'' These provisions should
also alleviate the concern expressed in the interim update on
information sharing from the Communications Security, Reliability, and
Interoperability Council (CSRIC), that our rules may conflict with
CISA. Security is an essential part of preventing bad actors from
gaining unauthorized access to the system or making abusive use of it
with spam, malware, or denial of service attacks. Research and
development into new techniques and technologies for addressing fraud
and abuse may require internal use of customer PI, but also disclosures
to third-party researchers
[[Page 87305]]
and other collaborators. However, as with other applications of this
exception, carriers should not disclose more information than is
reasonable to achieve this purpose, and should take reasonable steps to
ensure that the parties with which they share information use this
information only for the purposes for which it was disclosed. Feamster
et al. suggest that security research receive a specific exemption, so
long as security disclosures be limited to those that: Promote
security, stability, and reliability of networks; do not violate
privacy; and benefit research in a way that outweighs privacy risks.
They also highlight particular categories of researchers to whom
disclosure represents less privacy risk. While we decline to include
this specific exemption and its criteria, we note that similar steps to
mitigate privacy risks and determine trustworthy recipients can be
useful factors in determining reasonableness.
215. Providing Inbound Services to Customers. Customers expect that
a carrier will use their customer PI when they initiate contact with
the carrier in order to ask for support, referral, or new services in a
real-time context. Therefore, within the limited context of the
particular interaction, carriers can use customer PI to render the
services that the customer requests without receiving additional
approval from the customer. This provision represents a more
generalized version of the exception in section 222(d)(3), which
specifies that carriers may use customer PI ``for the duration of [a
support, referral, or request for new services] call.'' Under the rule
we adopt today, carriers may use customer PI for the duration of any
real-time interaction, including voice calls, videoconferencing, and
online chats. However, given the less formal nature of such requests, a
carrier's authorization to use the customer PI without additional
permission should only last as long as that particular interaction
does, and not persist longer. We find that this provision will achieve
the same purpose as existing section 64.2008(f) of our rules, which
allows carriers to waive certain notice requirements for one-time usage
of customer PI. We believe that carriers' ability to use customer PI
for these purposes without additional customer permission obviates the
need for streamlined notice and consent requirements in one-time
interactions.
216. Some commenters have argued that our rules should permit a
carrier to share customer PI with its agents absent customer approval,
noting the need to share customer PI with agents to provide customer
support, billing, or other tasks. We agree that such sharing is often
necessary, and the limitations and exceptions outlined above allow
carriers to share customer PI with their agents without additional
customer approval. To the extent that a carrier needs to share customer
PI with an agent for a non-exempt task, it needs no more customer
approval than it would have needed in order to perform that task
itself. This is consonant with the Communications Act's requirement
that carriers' agents, acting in the scope of their employment, stand
in the place of the carrier, both in terms of rights and liabilities.
217. Providing Certain Customer PI in Emergency Situations. In
adopting section 222, Congress recognized the important public safety
interests in ensuring that carriers can use and share necessary
customer information in emergency situations. Section 222(d)(4)
specifically allows carriers to provide call location information of
commercial mobile service users to: (1) Certain specified emergency
services, in response to a user's call for emergency services; (2) a
user's legal guardian or immediate family member, in an emergency
situation that involves the risk of death or serious physical harm; and
(3) to providers of information or database management services solely
for the purpose of assisting in the delivery of emergency services in
the case of an emergency. We adopt rules mirroring these exceptions,
and expand the scope of information that may be disclosed under these
circumstances to include customer location information and non-
sensitive customer PI.
218. While commercial mobile service users' location may be the
information most immediately relevant to emergency services personnel,
other forms of customer PI may also be relevant for customers using
services other than commercial mobile services, especially if customers
are seeking emergency assistance through means other than dialing 9-1-1
on a voice line. Expanding the types of information available in an
emergency to include non-sensitive information such as other known
contact information for the customer or the customer's family or legal
guardian will allow carriers the flexibility necessary to keep
emergency services informed with actionable information. However,
recognizing the concerns that too broad an exception could lead to
increased exposure of sensitive information, we extend the exception
only to customer location information and non-sensitive customer PI.
219. We recognize that, as with any provision that allows
disclosure of a customer's information, this exception can potentially
be abused. Various bad actors may use pretexting techniques, pretending
to be a guardian, immediate family member, emergency responder, or
other authorized entity to gain access to customer PI. As with all of
the other provisions of these rules, we expect carriers to abide by the
security standards set forth in Part III.E, below. Under these
standards, we expect that carriers will reasonably authenticate third
parties to whom they intend to disclose or permit access to customer
PI. This need to act reasonably also applies to authenticating
emergency services and other entities covered under this exception, as
well as authenticating customers themselves.
220. We decline suggestions that we allow carriers only to divulge
customer PI in emergency situations to emergency contact numbers
specified by the customer in advance. While such a safeguard could
prevent a certain amount of pretexting, we believe that such a
requirement would be overly restrictive and, in the case of call
information, contrary to the statute. If such a requirement were in
place, customers who failed to supply or update emergency contact
information would be denied the ability for guardians or family members
from being contacted. Recognizing the permissible nature of section
222(d), we do not prohibit carriers from using such a safeguard if they
so choose.
3. Requirements for Soliciting Customer Opt-Out and Opt-In Approval
221. In this section, we discuss the requirements for soliciting
customer approval for the use and sharing of customer PI. First, we
require telecommunications carriers to solicit customer approval at the
point of sale, and permit further solicitations after the point of
sale. Next, we require that carriers actively contact their customers
in these subsequent solicitations, to ensure that customers are
adequately informed. Finally, we require the solicitations to be clear
and conspicuous, to be comprehensible and not misleading, and to
contain the information necessary for a customer to make an informed
choice regarding her privacy.
222. Timing of Solicitation. Based on the record before us, we
conclude that BIAS providers and other telecommunications carriers must
solicit customers' privacy choices at the point of sale. We agree with
the FTC and other commenters that the point of sale remains a logical
time for customers
[[Page 87306]]
to exercise privacy decisions because it precedes the carriers' uses of
customer PI; frequently allows for clarification of terms between
customer and carrier; and avoids the need for customers to make privacy
decisions when distracted by other considerations, and is the time when
customers are making decisions about material terms.
223. We further find that, in addition to soliciting choice at
point-of-sale, a carrier seeking customer approval to use customer PI
may also solicit that permission at any time after the point after the
sale, so long as the solicitation provides customers with adequate
information as specified in these rules. This allows carriers to supply
customers with relevant information at the most relevant time and in
the most relevant context. Moreover, a carrier that makes material
changes to its privacy policy must solicit customers' privacy choices
before implementing those changes. Material retroactive changes require
opt-in customer approval as discussed above in Part III.D.1.a(ii).
Consistent with our sensitivity-based framework, prospective material
changes require opt-in approval if they entail use or sharing of
sensitive customer PI, and opt-out approval if they entail use or
sharing of non-sensitive customer PI.
224. Methods of Solicitation. We agree with commenters who
recommend that we not require particular formats or methods by which a
carrier must communicate its solicitation of consent to customers. On
this point, we agree with NTCA and USTelecom, which request flexibility
in determining the means of solicitation, arguing that carriers are
best placed to determine the most effective ways of reaching their
customers.
225. The existing voice rules contain specific requirements for
solicitations sent as email, such as a requirement that the subject
line clearly and accurately identify the subject matter of the email.
We decline to include such specific requirements and thereby provide
carriers with additional flexibility to develop clear notices that best
serve their customers. However, the clarity and accuracy of an email
subject line are highly relevant to an overall assessment of whether
the solicitation as a whole was clear, conspicuous, comprehensible and
not misleading.
226. Contents of Solicitation. Carriers' solicitations of opt-in or
opt-out consent to use or share customer PI must clearly and
conspicuously inform customers of the types of customer PI that the
carrier is seeking to use, disclose, or permit access to; how those
types of customer PI will be used or shared; and the categories of
entities with which that information is shared. The solicitations must
also be comprehensible and not misleading, and be translated into a
language other than English if the telecommunications carrier transacts
business with the customer in that language. As with our notice
requirements, we decline to specify a particular format or wording for
this solicitation, so long as the solicitation meets the standards
described above. The solicitation must provide a means to easily access
the carrier's privacy policy as well as a means to easily access to a
mechanism, described below in Part III.D.4, by which the customer can
easily exercise his choice to permit or deny the use or sharing of his
customer PI. Access to the choice mechanism may take a variety of
forms, including being built into the solicitation, or provided as a
link to the carrier's Web site, an email address that will receive the
customer's choice, or a toll-free number that a customer can call to
make his choice.
227. As a point of clarification, the distinction between notice
and consent solicitation is one of functionality, not necessarily of
form. Choice solicitations may be combined with notices of privacy
policies or notices of material change in privacy policies, but only to
the extent that both the notices and solicitations meet their
respective requirements for being clear and conspicuous,
comprehensible, and not misleading. For instance, a carrier instituting
a new program that uses non-sensitive customer PI prospectively could
send an existing customer a notice of material change to the privacy
policy that contained the opt-out solicitation (described in this Part)
and access to the customer's choice mechanism (described in Part
III.D.4, infra). This communication would, subject to the ease-of-use
requirements, satisfy the rules. We further clarify that we are not
requiring carriers to have special ``customer PI'' choice mechanisms
that are different and stand alone from other mechanisms that may
exist, so long as those mechanisms satisfy the outcomes required by our
rules (such as, among other things, that they be clear and
conspicuous). Likewise, we are not mandating a ``blanket'' choice
mechanism. A carrier is free to give the customer the ability to pick
and choose among which marketing channels the customer will opt out of.
At the same time, if a carrier wanted to give the customer the ability
to opt out of all marketing with a single click, that would be
consistent with our rules.
4. Customers' Mechanisms for Exercising Privacy Choices
228. In soliciting a customer's approval for the use or sharing of
his or her customer PI, we require carriers to provide customers with
access to a choice mechanism that is simple, easy-to-use clear and
conspicuous, in language that is comprehensible and not misleading, and
made available at no additional cost to the customer. This choice
mechanism must be persistently available on or via the carrier's Web
site; on the carrier's app, if it provides one for account management
purposes; and on any functional equivalents of either. We intend for
this requirement to mirror the requirements for a provider's provision
of its notice of privacy policies. If a carrier lacks a Web site, it
must provide a persistently available mechanism by another means such
as a toll-free telephone number. However, we decline to specify any
particular form or format for this choice mechanism. Carriers must act
upon customers' privacy choices promptly.
229. Format. As with our requirements for notices and for
solicitations of approval, the actual mechanism provided by the carrier
by which customers may inform the carrier of their privacy choices must
be clear and conspicuous, and in language that is comprehensible and
not misleading. Because users' transaction costs, in terms of time and
effort expended, can present a major barrier to customers exercising
choices, carriers' choice mechanisms must also be easy to use, ensuring
that customers can readily exercise their privacy rights.
230. We encourage but do not require carriers to make available a
customer-facing dashboard. While a customer-facing dashboard carries a
number of advantages, we are mindful of the fact that it may not be
feasible for certain carriers, particularly small businesses, and that
improved technologies and user interfaces may lead to better options.
Preserving this flexibility benefits both carriers and customers by
enabling carriers to adopt a mechanism that suits the customer's
abilities and preferences and the carrier's technological capabilities.
As noted, we are particularly mindful of the needs of smaller carriers.
For example, WTA explains that ``[a] privacy dashboard as envisioned in
the NPRM would require providers to aggregate information that is
likely housed today on multiple systems and develop both internal and
external user interfaces.'' ACA adds that creating a privacy dashboard
would be a ``near-impossible task'' for small BIAS providers.
Particularly in light of the
[[Page 87307]]
concerns expressed by small providers and their representatives, we
decline to mandate that BIAS providers make available a customer-facing
dashboard.
231. Timing to Implement Choice. We require carriers to give effect
to a customer's grant, denial, or withdrawal of approval ``promptly.''
Aside from the ordinary time that might be required for processing
incoming requests, customers must be confident that their choices are
being respected. The flexibility of this standard enables carriers to
account for the relative size of the carrier, the type and amount of
customer PI being used, and the particular use or sharing of the
customer PI. Since the carrier process and technical mechanics of
implementing a customer denial of approval for a new use may well
differ from implementing a customer's denial of a previously approved
practice, we do not expect that the time frames for each will
necessarily be the same. The Commission has long held this
interpretation to be consistent with the language and design of section
222.
232. Choice Persistence. As in our existing rules and as proposed
in the NPRM, we require a customer's choice to grant or deny approval
for use of her customer PI to remain in effect until a customer revokes
or limits her choice. We find that customers reasonably expect that
their choices will persist and not be changed without their affirmative
consent (in the case of sensitive customer PI and previously collected
non-sensitive customer PI) or at least the opportunity to object (in
the case of yet to be collected non-sensitive customer PI).
233. Small Carriers. Some small carriers expressed concern on the
record that their Web sites do not allow for customers to manage their
accounts, and thus could not offer an in-browser way for customers to
immediately exercise their privacy choices on the carriers' Web sites.
Since we decline to require a specific format for accepting customer
privacy choices, any carriers, including small carriers, that lack
choice mechanisms that customers can operate directly from the
carrier's Web site or app may be able to accept customer preferences by
providing on their Web sites, in their apps, and any functional
equivalents, an email address, 24-hour toll-free phone number, or other
easily accessible, persistently available means to exercise their
privacy choices.
5. Eliminating Periodic Compliance Documentation
234. We eliminate the specific compliance recordkeeping and annual
certification requirements in section 64.2009 for voice providers.
Eliminating these requirements reduces burdens for all carriers, and
particularly small carriers, which often may not need to record
approval if they do not use or share customer PI for purposes other
than the provision of service. We find that carriers are likely to keep
records necessary to allow for any necessary enforcement without the
need for specific requirements, and that notifications of data breaches
to customers and to enforcement agencies (including the Commission)
will ensure compliance with the rules and a workable level of
transparency for customers.
E. Reasonable Data Security
235. In this section, we adopt a harmonized approach to data
security that protects consumers' confidential information by requiring
BIAS providers and other telecommunications carriers to take reasonable
measures to secure customer PI. The record reflects broad agreement
with our starting proposition that strong data security practices are
crucial to protecting the confidentiality of customer PI. There is also
widespread agreement among industry members, consumer groups,
academics, and government entities about the importance of flexible and
forward-looking reasonable data security practices.
236. In the NPRM we proposed rules that included an overarching
data security expectation and specified particular types of practices
that providers would need to implement to comply with that standard,
while allowing providers flexibility in implementing the proposed
requirements (e.g., taking into account, at a minimum, the nature and
scope of the provider's activities and the sensitivity of the customer
PI held by the provider). Based on the record in this proceeding, we
have modified the overarching data security standard to more directly
focus on the reasonableness of the providers' data security practices.
Also based on the record, we decline to mandate specific activities
that providers must undertake in order to meet the reasonable data
security requirement. We do, however, offer guidance on the types of
data security practices we recommend providers strongly consider as
they seek to comply with our data security requirement--recognizing, of
course, that what constitutes ``reasonable'' data security is an
evolving concept.
237. The approach we take today underscores the importance of
ensuring that providers have robust but flexible data security
practices that evolve over time as technology and best practices
continue to improve. It is consistent with the FTC's body of work on
data security, the NIST Cybersecurity Framework (NIST CSF), the
Satellite and Cable Privacy Acts, and the CPBR, and finds broad support
in the record. In harmonizing the rules for BIAS providers and other
telecommunications carriers we apply this more flexible and future-
focused standard to voice providers as well, replacing the more rigid
data security procedures codified in the existing rules and thus
addressing the potential that these existing procedures are both under-
and over-inclusive--with the expectation that strong and flexible,
harmonized, forward-looking rules will benefit consumers and industry.
1. BIAS and Other Telecommunications Providers Must Take Reasonable
Measures To Secure Customer PI
238. The rule that we adopt today requires that every BIAS provider
and other telecommunications carrier take reasonable measures to
protect customer PI from unauthorized use, disclosure, or access. To
comply with this requirement, a provider must adopt security practices
appropriately calibrated to the nature and scope of its activities, the
sensitivity of the underlying data, the size of the provider, and
technical feasibility.
239. As we observed in the NPRM, privacy and security are
inextricably linked. Section 222(a) imposes a duty on
telecommunications carriers to ``protect the confidentiality of
proprietary information of and relating to . . . customers.''
Fulfilling this duty requires a provider to have sound data security
practices. A telecommunications provider that fails to secure customer
PI cannot protect its customers from identity theft or other serious
personal harm, nor can it assure its customers that their choices
regarding use and disclosure of their personal information will be
honored. As commenters point out, contemporary data security practices
are generally oriented toward ``confidentiality, integrity, and
availability,'' three dynamic and interrelated principles typically
referred to together as the ``CIA'' triad. Confidentiality refers
specifically in this context to protecting data from unauthorized
access and disclosure; integrity refers to protecting information from
unauthorized modification or destruction; and availability refers to
providing authorized users with access to the information when needed.
Our discussion of ``confidentiality'' as part of the CIA triad of data
security
[[Page 87308]]
principles is not intended to suggest that the term has the same
meaning under section 222 of the Act as it has in the CIA context. We
agree with NTCA that confidentiality, integrity and availability are
best understood as ``elements of a single duty'' to secure data, and
their collective purpose is to ``illustrate the various considerations
that must be engaged when the management of confidential information is
considered.'' The record confirms that these are core principles that
underlie the modern-day practice of data security. Thus, we expect
providers to take these principles into account when developing,
implementing, and monitoring the effectiveness of adopted measures to
meet their data security obligation.
240. By requiring providers to take reasonable data security
measures, we make clear that providers will not be held strictly liable
for all data breaches. Instead, we give providers significant
flexibility and control over their data security practices while
holding these practices to a standard of reasonableness that respects
context and is able to evolve over time. There is ample precedent and
widespread support in the record for this approach. FTC best practices
guidance advises companies to ``make reasonable choices'' about data
security, and in numerous cases the FTC has taken enforcement action
against companies for failure to take ``reasonable and appropriate''
steps to secure customer data. Many states also have laws that require
regulated entities to take ``reasonable measures'' to protect the
personal data they collect. The CPBR reaffirms this standard, directing
companies to ``establish, implement and maintain safeguards reasonably
designed to ensure the security of'' personal customer information.
Placing the responsibility on companies to develop and manage their own
security practices is also a core tenet of the NIST CSF. A diverse
range of commenters in this proceeding support adoption of a data
security requirement for BIAS providers that is consistent with these
principles. Indeed, several providers acknowledge the importance of and
need for reasonable data security.
241. By clarifying that our standard is one of ``reasonableness''
rather than strict liability, we address one of the major concerns that
providers--including small providers and their associations--raise in
this proceeding. WTA, for instance, argues that a strict liability
standard ``is particularly inappropriate for small providers that lack
the resources to install the expensive and constantly evolving
safeguards necessary to comply with a strict liability regime.'' We
agree with these parties, and others such as the Federal Trade
Commission staff, that our rules should focus on the reasonableness of
the providers' practices and not hold providers, including smaller
providers, to a standard of strict liability.
242. We also agree with those commenters that argue that the
reasonableness of a provider's data security practices will depend
significantly on context. The rule therefore identifies four factors
that a provider must take into account when implementing data security
measures: The nature and scope of its activities; the sensitivity of
the data it collects; its size; and technical feasibility. Taken
together, these factors give considerable flexibility to all providers.
No one factor, taken independently, is determinative.
243. We include ``size'' in part based on the understanding in the
record that smaller providers employ more limited data operations in
comparison to their larger provider counterparts. While the other
contextual factors already account considerably for the varying data
collection and usage practices of providers of different sizes, we
agree with commenters that size is an independent factor in what
practices are reasonable for smaller providers, particularly to the
extent that the smaller providers engage in limited data usage
practices. For instance, WTA explains that ``its members do not
currently, and have no plans to, retain customer Internet browsing
histories and related information on an individual subscriber basis
because the cost . . . would significantly outweigh any potential
monetary benefit derived from data relating to the small subscriber
bases of [rural carriers].'' Several small provider commenters also
point out that many such providers have few employees and limited
resources. Accordingly, certain security measures that may be
appropriate for larger providers, such as having a dedicated official
to oversee data security implementation, are likely beyond the needs
and resources of the smallest providers. Our decision not to adopt
minimum required security practices should further allay concerns about
the impact of the rule on small providers. Our inclusion of ``size'' as
a factor makes clear that small providers are permitted to adopt
reasonable security practices that are appropriate for their
businesses. At the same time, we emphasize that all providers must
adopt practices that take into account all four contextual factors. For
instance, a small provider with very expansive data collection and
usage practices could not point to its size as a defense for not
implementing security measures appropriate for the ``nature and scope''
of its operations.
244. The rule also takes into account the distinction between
sensitive and non-sensitive information that underlies our customer
approval requirements. Because the protection of both sensitive and
non-sensitive customer PI is necessary to give effect to customer
choices about the use and disclosure of their information, our data
security rule must cover both. The State Privacy and Security Coalition
argues that the security rule proposed in the NPRM would be too
burdensome when applied to non-sensitive information. We believe the
modifications we have made to the proposal, including our decision not
to adopt minimum required security practices, sufficiently address this
concern. At the same time, we decline to require ``the same, strict
data security protections'' for all such information. Rather, we direct
providers to calibrate their security measures to ``the sensitivity of
the underlying data.'' This approach finds broad support in the record
and is consistent with FTC guidance and precedent. Where sensitive and
non-sensitive customer PI are commingled, a carrier should err on the
side of treating the information as sensitive. Similarly, our inclusion
of ``technical feasibility'' as a factor makes clear that reasonable
data security practices must evolve as technology advances. Because our
rule gives providers broad flexibility to consider costs when
determining what security measures to implement over time, we do not
find it necessary to include ``cost of security measures'' as a
separate factor as AT&T and other commenters propose. This means that
every provider must adopt security measures that reasonably address the
provider's data security risks.
245. In their comments, the National Consumers League recommended
that we establish data security threshold requirements that providers
could build on, but not fall below. We find that unnecessary in light
of the rules we adopt today. We believe that the flexible and forward-
looking rule we adopt combined with the discussion that follows
regarding exemplary practices makes clear that the rule sets a high and
evolving standard of data security. A provider that fails to keep
current with industry best practices and other relevant guidance in
designing and implementing its data security practices runs the risk of
both a preventable data breach and that it will be found out of
compliance with our data security rule.
[[Page 87309]]
We also observe that we have already acted in multiple instances to
enforce carriers' broad statutory obligations to take reasonable
precautions to protect sensitive customer information. In the TerraCom
proceeding, for instance, we took action against a carrier under
section 222 of the Act for its failure to employ ``appropriate security
measures'' to protect customers' Social Security numbers and other data
from exposure on the public Internet. Moreover, in TerraCom and other
data security enforcement proceedings, parties have agreed to detailed
data security obligations on individual carriers as conditions of
settlement. For example, as part of one consent decree entered into by
AT&T and the Commission's Enforcement Bureau, AT&T agreed to develop
and implement a compliance plan aimed at preventing recurrence of a
major data security lapse. We have the ability to pursue similar
remedial conditions in the context of any enforcement proceeding that
may arise under the data security rule we adopt today, based on the
facts of the case.
246. In addition, the flexibility we have built into our rule
addresses concerns about potential conflict with the NIST Cybersecurity
Framework (NIST CSF) and with other initiatives to confront data
security as well as broader cyber threats. The Commission values the
NIST CSF and has demonstrated its commitment to promoting its adoption
across the communications sector, and we have accordingly fashioned a
data security rule that closely harmonizes with the NIST CSF's flexible
approach to risk management. The rule gives providers ample flexibility
to implement the NIST CSF on a self-directed basis, and it imposes on
BIAS providers a standard for data security similar to that which
governs edge providers and other companies operating under the FTC's
general jurisdiction. We also reject any suggestions that our rule will
impinge on BIAS providers' efforts to improve Internet security or
protect their customers from malware, phishing attacks, and other cyber
threats. Indeed, protecting against such attacks and threats will only
bolster a company's claims that it has reasonable data security
practices. Moreover, as explained above, the rules adopted in this
Report and Order do not prohibit or impose any constraint on cyber
threat information sharing that is lawfully conducted pursuant to the
Cybersecurity Information Sharing Act of 2015 (CISA). Indeed, we
believe that information sharing is a vital part of promoting data
security across the industry.
247. Finally, we recognize that there is more to data security than
the steps each individual provider takes to secure the data it
possesses. For instance, effective consumer outreach and education can
empower customers to be pro-active in protecting their own data from
inadvertent or malicious disclosures. We also encourage providers to
continue to engage constructively with the Commission, including
through the CSRIC and related efforts, to develop and refine data
security best practices. Also, as carriers develop and manage their
security practices, we encourage them to be forward-looking. In
particular, carriers should make efforts to anticipate future data
security threats and proactively work to mitigate future risk drivers.
2. Practices That Are Exemplary of Reasonable Data Security
248. While we do not prescribe specific practices that a provider
must undertake to comply with our data security rule, the requirement
to engage in reasonable data security practices is set against a
backdrop of existing privacy and data security laws, best practices,
and public-private initiatives. Each of these is a potential source of
guidance on practices that may be implemented to protect the
confidentiality of customer PI. For the benefit of small providers, and
others, below we discuss in more detail an evolving set of non-
exclusive practices that we consider relevant to the question of
whether a provider has complied with the requirement to take reasonable
data security measures. While certain of these practices were
originally proposed as minimum data security requirements, we discuss
them here as part of a set of practices that we presently consider
exemplary of a reasonable and evolving standard of data security. We
agree with commenters that dictating a minimum set of required
practices could foster a ``compliance mindset'' that is at odds with
the dynamic and innovative nature of data security. Providers with less
established data security programs may interpret such requirements as a
checklist of what is required to achieve reasonable data security, an
attitude we seek to discourage. We also seek to avoid codifying
practices as the state of the art continues to rapidly evolve. For
example, National Consumers League recommends adoption of multi-factor
authentication as a required ``minimum baseline.'' Yet the record
includes discussion of a variety of techniques for robust customer
authentication, not all of which would necessarily qualify as ``multi-
factor'' in all circumstances. Our approach places the responsibility
on each provider to develop and implement data security practices that
are reasonable for its circumstances and to refine these practices over
time as circumstances change. Rather than mandate what these practices
must entail, we provide guidance to assist each provider in achieving
reasonable data security on its own terms. Taking this approach will
also allay concerns that overly prescriptive rules would frustrate
rather than improve data security.
249. While providers are not obligated to adopt any of the
practices we suggest, we believe that together they provide a solid
foundation for data security that providers can modify and build upon
as their risks evolve and, as such, the presence and implementation of
such practices will be factors we will consider in determining, in a
given case, if a provider has complied with the reasonable data
security requirement. However, these practices do not constitute a
``safe harbor.'' A key virtue of the flexible data security rule we
adopt today is that it permits data security practices to evolve as
technology advances and new methods and techniques for data security
come to maturity. We are concerned that any fixed set of security
practices codified as a safe harbor would fail to keep pace with this
evolutionary process. The availability of a safe harbor may also
discourage experimentation with more innovative data security practices
and techniques. While it may be possible to construct a safe harbor
``with concrete requirements backed by vigorous enforcement'' that also
takes the evolution of data security practices into account, we find no
guidance in the record on how to do so in a workable fashion.
Accordingly, our approach is to evaluate the reasonableness of any
provider's data security practices on a case-by-case basis under the
totality of the circumstances, taking into account the contextual
factors that are part of the rule. This approach is well-grounded in
precedent and will provide sufficient guidance to providers. Our
approach to data security also mirrors the FTC's, under which the
reasonableness of an individual company's data security practices is
assessed against a background of evolving industry guidance. The CPBR
also takes a similar approach.
250. Engagement with Industry Best Practices and Risk Management
Tools. We encourage providers to engage with and implement up-to-date
and relevant
[[Page 87310]]
industry best practices, including available guidance on how to manage
security risks responsibly. One powerful tool that can assist providers
in this respect is the NIST CSF, which many commenters endorse as a
voluntary framework for cyber security and data security risk
management. We agree that proper implementation of the NIST CSF, as
part of a provider's overall risk management, would contribute
significantly to reasonable data security, and that use of the NIST CSF
can guide the implementation of specific data security practices that
are within the scope of that framework. We encourage providers to
consider use of the NIST CSF, as the widespread adoption of this common
framework permits the Commission to optimize its engagement with the
industry. That said, we clarify that use of the NIST CSF is voluntary,
and providers retain the option to use whatever risk management
approach best fits their needs. In addition, we encourage providers to
look to guidance from the FTC, as well as materials that have been
issued to guide the implementation of data security requirements under
HIPAA, GLBA, and other relevant statutory frameworks. Finally, we note
that a Commission multi-stakeholder advisory body, the Communications
Security, Reliability, and Interoperability Council (CSRIC), has
produced a rich repository of best practices on various aspects of
communications security as well as alerting the Commission of useful
activities for which Commission leadership can effectively convene
stakeholders to address industry-wide risk factors. In particular,
CSRIC has developed voluntary mechanisms by which the communications
industry can address cyber risk, based upon the NIST CSF. Many
providers and industry associations that have participated in this
proceeding are active contributors to the CSRIC's work. We encourage
providers to consider implementation of the CSRIC best practices as
appropriate.
251. Strong Accountability and Oversight. Strong accountability and
oversight mechanisms are another factor we consider exemplary of
reasonable data security. As an initial matter, we agree with the FTC
that the development of a written comprehensive data security program
is a practice that is a best practice in promoting reasonable data
security. As the FTC explains, putting a data security program in
writing can ``permit internal and external auditors to measure the
effectiveness of the program and provide for continuity as staff
members leave and join the team.'' A written security program can also
reinforce the specific practices a provider implements to achieve
reasonable data security.
252. A second accountability mechanism that helps a company engage
in reasonable data security is the designation of a senior management
official or officials with personal responsibility over and
accountability for the implementation and maintenance of the provider's
data security practices as well as an official responsible for its
privacy practices. Companies that take this step are advised to couple
designation of corporate privacy and security roles and
responsibilities with effective interaction with Boards of Directors
(or, for firms without formal Board oversight, such other structure
governing the firm's risk management and oversight), to provide a
mechanism for including cyber risk reduction expense within overall
risk management plans and resource allocations. That said, we do not
specify the qualifications or status that such an official would need
to possess, and we recognize that for a smaller provider these
responsibilities may rest with someone who performs multiple functions
or may be outsourced. Another practice that is indicative of reasonable
data security is training employees and contractors on the proper
handling of customer PI. Employee training is a longstanding component
of data security under the Commission's existing rules. We encourage
providers to seek out expert guidance and best practices on the design
and implementation of efficacious training programs. Finally,
accountability and oversight are also relevant in the context of
sharing customer PI with third parties. We agree with commenters that
providers must take reasonable steps to promote the safe handling of
customer PI they share with third parties. Perhaps the most
straightforward means of achieving this accountability is to obtain
data security commitments from the third party as a condition of the
disclosure. We also remind providers that they are directly accountable
for the acts and omissions of their agents, including independent
contractors, for the entirety of the data lifecycle. This means that
the acts and omissions of agents will be taken into account in
assessing whether a provider has engaged in reasonable data security
practices.
253. Robust Customer Authentication. The strength of a provider's
customer authentication practices also is probative of reasonable data
security. We have recognized that there is no single approach to
customer authentication that is appropriate in all cases, and
authentication techniques and practices are constantly evolving. That
said, the record documents some discernable trends in this area that we
would currently expect providers to take into account. For instance, we
encourage providers to consider stronger alternatives to relying on
rudimentary forms of authentication like customer-generated passwords
or static security questions. Providers may also consider the use of
heightened authentication procedures for any disclosure that would
place a customer at serious risk of harm if the disclosure were
improperly made. In addition, we encourage providers to periodically
reassess the efficacy of their authentication practices and consider
possible improvements. Another practice we encourage providers to
consider is to notify customers of account changes and attempted
account changes. These notifications provide a valuable tool for
customers to monitor their own accounts' security. Providers that
implement them should consider the potential for ``notice fatigue'' in
determining how often and under what circumstances these notifications
are sent.
254. Other Practices. The record identifies other practices that we
encourage providers to consider when implementing reasonable security
measures. For instance, several commenters cite the importance of
``data minimization,'' which involves thinking carefully about what
data to collect, how long to retain it, and how to dispose of it
securely. The principle of data minimization is also embodied in FTC
guidance, in the CPBR, and in the Satellite and Cable Privacy Acts. We
encourage providers to look specifically to the FTC's ``Disposal Rule''
for guidance on the safe destruction and disposal of customer PI. We
also encourage providers to consider data minimization practices that
apply for the entirety of the data lifecycle, from collection to
deletion. In addition, several commenters recommend strong data
encryption, another practice that the FTC advises companies to
consider. We agree with commenters that technologically sound data
encryption can significantly improve data security, in part by
minimizing the consequences of a breach. Finally, we believe that the
lawful exchange of information regarding cyber incidents and threats is
relevant to promoting data security, and encourage providers to
consider engagement in established information sharing practices.
255. The exemplary practices discussed above are not an exhaustive
[[Page 87311]]
list of reasonable data security practices. A provider that implements
each of these practices may still fall short of its data security
obligation if there remain unreasonable defects in its protection of
the confidentiality of customer PI. Conversely, a provider may satisfy
the rule without implementing each of the listed practices. The key
question is whether a provider has taken reasonable measures to secure
customer PI, based on the totality of the circumstances. In taking this
approach, we acknowledge that the adoption of more prescriptive,
bright-line requirements could offer providers greater certainty as to
what reasonable data security requires. Yet virtually all providers
that have addressed the issue--including small providers and their
associations--oppose such requirements. Rather, these providers prefer
the approach we have taken in this Report and Order, i.e., the adoption
of a ``reasonableness'' standard that mirrors the FTC's. Also like the
FTC, we have provided the industry with guidance on how to achieve
reasonable data security in compliance with our rule. We anticipate
building upon this guidance over time as data security practices evolve
and with them the concept of reasonable data security.
3. Extension of the Data Security Rule To Cover Voice Services
256. In light of the record, we conclude that harmonization of the
data security requirements that apply to BIAS and other
telecommunications services is the best option for providers and
consumers alike. Accordingly, we extend to voice services the data
security rule we have adopted for BIAS. This data security rule
replaces the more inflexible data security requirements presently
codified in Part 64 of the rules.
257. There are many reasons to harmonize the data security
requirements that apply to BIAS and voice services. As an initial
matter, many providers offer services of both kinds and often sell them
together in bundled packages. We agree with commenters that argue that
applying different security requirements to the two kinds of services
may confuse customers and add unnecessary complexity to providers' data
security operations, which may be particularly burdensome for smaller
providers. In addition, the evidence suggests that the data security
requirements of the existing rules no longer provide the best fit with
the present and anticipated communications environment. For instance,
expert commentary on the topic of robust customer authentication
indicates that this is a complex area where providers need flexibility
to adapt their practices to new threats. The highly specific procedures
outlined in the existing voice rules are incongruous with this approach
to customer authentication.
258. Moreover, retaining the prescriptive data security rules that
apply to voice services could impede the development and implementation
of more innovative data security measures for BIAS. Providers subject
to both sets of rules may determine that the easiest and most cost-
effective path to compliance is to adopt for both services the more
rigid data security practices that the voice rules require. Such an
outcome would contravene our intent to establish a robust and flexible
standard for BIAS data security that evolves over time.
259. Accordingly, we find that the best course is to replace the
data security rules that currently govern voice services with the more
flexible standard we are adopting for BIAS. We find that the rule as
written is sufficiently broad to cover BIAS and other
telecommunications services. We also clarify that the exemplary
practices we discuss above may be implemented differently depending on
the services an entity provides. For instance, data security best
practices that pertain specifically to broadband networks or services
may or may not be relevant in the context of providing voice services.
260. In harmonizing the data security rules for voice services and
BIAS, we acknowledge that voice providers have operated for many years
under the existing rules and have tailored their data security
practices accordingly. We do not expect any provider to revamp its data
security practices overnight. On the contrary, as explained below, we
are adopting an implementation schedule that affords providers ample
time to bring their practices into compliance with the new rules.
F. Data Breach Notification Requirements
261. In this section we adopt rules requiring BIAS providers and
other telecommunications carriers to notify affected customers, the
Commission, the FBI, and the Secret Service of data breaches unless the
provider reasonably determines that no harm to customers is reasonably
likely to occur. The data breach notification requirements adopted in
this Report and Order extend to breaches involving a carrier's vendors
and contractors. For purposes of these rules, we define a breach as any
instance in which a person, without authorization or exceeding
authorization, has gained access to, used, or disclosed customer
proprietary information. The record clearly demonstrates that data
breach notification plays a critical role in protecting the
confidentiality of customer PI. An obligation to notify customers and
law enforcement agencies when customer data is improperly accessed,
used, or disclosed incentivizes carriers to adopt strong data security
practices. Breach notifications also empower customers to protect
themselves against further harms, help the Commission identify and
confront systemic network vulnerabilities, and assist law enforcement
agencies with criminal investigations. At the same time, unnecessary
notification can cause notice fatigue, erosion of consumer confidence
in the communications they receive from their provider, and inflated
compliance costs. The approach we adopt today finds broad support in
the record and will maximize the benefits of breach notification as a
consumer protection and public safety measure while avoiding
unnecessary burdens on providers and their customers. Furthermore, our
approach is consistent with how federal law enforcement agencies, such
as the FBI and Secret Service, conduct and coordinate data breach
investigations.
262. First, we address the circumstances that will obligate BIAS
providers and other telecommunications carriers to notify the
Commission, federal law enforcement agencies, and customers of data
breaches. We note that these obligations are not mutually exclusive
with other data breach notification obligations stemming from other
state, local, or federal laws, or contractual obligations. This
includes a discussion of two related elements adopted today: The harm-
based notification trigger and the updated definition for ``breach.''
We then address the requirements that BIAS providers and other
telecommunications carriers must follow for providing notice to the
Commission and other federal law enforcement. Next, we describe the
specific notification requirements that BIAS providers and other
telecommunications carriers must follow in providing data breach
notifications to customers, including: The required timing for sending
notification; the necessary contents of the notification; and the
permissible methods of notification. We then discuss the data breach
record retention requirements. Finally, we explain our decision to
adopt rules that harmonize data breach requirements for BIAS providers
and other telecommunications carriers.
[[Page 87312]]
1. Harm-Based Notification Trigger
263. We require breach notification unless a carrier can reasonably
determine that no harm to customers is reasonably likely to occur as a
result of the breach. We do so to enable customers to receive the data
breach notifications that they need to take steps to protect
themselves, and to provide the Commission, the FBI, and Secret Service
with the information they need to evaluate the efficacy of data
security rules as well as detect systemic threats and vulnerabilities.
In the NPRM we sought comment on what should trigger data breach
notification, and based on the record, we conclude that the trigger
most suitable for our purposes is one based on the potential for
customer harm. Among its many benefits, this harm-based trigger will
avoid burdening providers and customers alike with excessive
notifications, and it will allow providers the flexibility to focus
limited resources on data security and ameliorating customer harms
resulting from data breaches rather than on notifications that have
minimal benefit to customers. The record reflects various harms
inherent in unnecessary notification, including notice fatigue, erosion
of consumer confidence in the communications they receive from their
provider, and compliance costs. The harm-based notification trigger we
adopt addresses these concerns, by limiting the overall volume of
notifications sent to customers and eliminating correspondence that
provides minimal or no customer benefit.
264. Our harm-based trigger has a strong basis in existing state
data breach notification frameworks. The triggers employed in these
laws vary from state to state, but in general they permit covered
entities to avoid notifying customers of breaches where the entity
makes some determination that the breach will not or is unlikely to
cause harm. Likewise, the FTC ``supports an approach that requires
notice unless a company can establish that there is no reasonable
likelihood of economic, physical, or other substantial harm.'' Our rule
similarly requires the carrier to reasonably determine that no harm to
customers is reasonably likely to occur. As such, we disagree with
commenters arguing that standards based on determinations of harm leave
consumers more vulnerable to that harm. On the contrary, the record,
and the many state laws addressing data breach notifications,
demonstrate that providers have ample experience determining a
likelihood of harm. Additionally, the reasonableness standard that
applies to both the carrier's evaluation and the likelihood of harm
adds an objective component to these determinations.
265. Further, the harm-based trigger places the burden on a carrier
that detects a breach to reasonably determine that no harm to customers
is reasonably likely to occur as a result of the breach. This responds
to concerns such as AAJ's that it is ``frequently impossible'' for a
carrier to immediately discern the full scope and ramifications of a
breach. Our harm-based trigger does not relieve a carrier of its
notification obligation simply by virtue of its failure or inability to
ascertain the harmful effects of a breach. Rather, carriers must take
the investigative steps necessary to reach a reasonable determination
that no such harm is reasonably likely. Where a carrier's investigation
of a breach leaves it uncertain whether a breach may have resulted in
customer harm, the obligation to notify remains. By contrast, requiring
customer notification only when a provider determines the presence of
some risk of harm would create perverse incentives not to carefully
investigate breaches.
266. In adopting a harm-based trigger, we clarify that its scope is
not limited to ``easily recognized financial harm.'' In the NPRM, we
acknowledged that ``harm'' is a concept that can be broadly construed
to encompass ``financial, physical, and emotional harm.'' We conclude
that the same construction of harm is appropriate for our final breach
notification rule. This decision is consistent with the fundamental
premise of this proceeding that customer privacy is about more than
protection from economic harm. The record demonstrates that commenters'
privacy concerns stem from more than just avoiding financial harms. As
such, we disagree with commenters who assert that financial loss or
identity theft should be the primary metrics for determining the level
of harm or whether harm exists at all. Some commenters have called
``for the FCC to help determine how organizations can better respond to
breaches in which personal, non-financial data is breached.'' We find
that within the meaning of section 222(a), threats to the
``confidentiality'' of customer PI include not only identity theft or
financial loss but also reputational damage, personal embarrassment, or
loss of control over the exposure of intimate personal details.
267. Relatedly, we establish a rebuttable presumption that any
breach involving sensitive customer PI presumptively poses a reasonable
likelihood of customer harm and would therefore require customer
notification. This rebuttable presumption finds a strong basis in the
record. Even commenters that favor minimal breach reporting generally
concede that customers are entitled to notification when their most
sensitive information is misused or disclosed. The presumption also
aligns with our decision to base the level of customer approval
required for use or disclosure of customer PI on whether the PI is
sensitive in nature. As we explain above, this distinction upholds the
widespread expectation that customers should be able to maintain
particularly close control over their most sensitive personal data.
While breaches of sensitive customer PI often present severe risks of
concrete economic harm, there is a more fundamental harm that comes
from the loss of control over information the customer reasonably
expects to be treated as sensitive.
268. We also find that our employing a harm-based trigger will
substantially reduce the burdens of smaller providers in reporting
breaches of customer PI. We agree with commenters stating that a
framework--such as ours--that allows providers to assess the likelihood
of harm to their customers will ultimately be less costly and ``will
not overburden small providers.'' The record indicates that smaller
providers tend to collect and use customer data, including sensitive
information, far less extensively than larger providers. More modest
collection and usage of customer PI leaves a provider less prone to
breaches that would trigger a data breach notification obligation under
our rule.
269. Finally, we clarify that our harm-based notification trigger
applies to breaches of data in an encrypted form. Whether a breach of
encrypted data presents a reasonable likelihood of harm will depend in
significant part on the likelihood that unauthorized third parties
reasonably would be expected to be able to decrypt the data. It also
will depend on, among other things, the scope and magnitude of
potential harm if the data were unencrypted. Factors that make
decryption more or less likely are therefore relevant in determining
whether a reasonable likelihood of customer harm is present in such
instances. These factors may include the quality of the encryption and
whether third parties can access the encryption key. Ultimately, a
provider must notify affected customers if it cannot reasonably
determine that a breach poses no reasonable likelihood of harm,
regardless of whether the breached data is encrypted.
270. With our adoption of a harm-based trigger, we have removed the
need
[[Page 87313]]
for a separate trigger based on intent. Thus, for purposes of these
rules, we adopt the definition of breach that we proposed in the NPRM
and define a breach as any instance in which a person, without
authorization or exceeding authorization, has gained access to, used,
or disclosed customer proprietary information. This definition is
broader than the definition in our existing rules, which includes an
intent element, and only applies to breaches of CPNI, in recognition
that the record indicates that the relevant factor for breach reporting
is not intent, but effect on the customer.
271. We agree with other commenters that inadvertent breaches can
be just as severe and harmful for consumers as intentional breaches,
and consumers are likely to care about serious breaches even when they
occur by accident or mistake. Moreover, whether or not a breach was
intentional may not always be immediately apparent. By defining breach
to include unintentional access, use, or disclosure we ensure that in
the event of a breach the provider has an incentive to investigate the
cause and effect of the breach, and the opportunity to respond
appropriately. Some commenters recommend that the definition of breach
include an intent element to avoid equating inadvertent disclosure of
customer PI to an employee or contractor of a provider with intentional
hacking of customer records. The adoption of a harm-based trigger--in
lieu of a trigger based on intent--creates a consistent obligation to
report breaches that may harm consumers, regardless of the source or
cause of the breach.
272. Commenters also argue that including an intent element in the
definition of breach would prevent excessive data breach notifications.
Commenters making this argument raise the prospect of a flood of
notifications for breaches that have no impact on the consumer,
including such good-faith errors as an employee inadvertently accessing
the wrong database. We share their general concern about the risk of
over-notification--it is costly to providers, without corresponding
benefit to consumers, and can lead to notice fatigue and possibly
consumer de-sensitization. However, in this context the argument is
misplaced. Identifying a data breach is only the first step towards
determining whether data breach notification is necessary. The harm-
based trigger that we adopt today relieves a provider from notifying
its customers and government agencies of breaches that result from
minor mistakes that create no risk of harm to the affected customers.
Based on this analysis, we find eliminating the word ``intentionally''
from our breach definition equally warranted for all telecommunications
carriers.
273. Our adoption of a harm-based trigger also addresses concerns
about the breadth of our breach definition. For example our definition
includes incidents where a person gains unauthorized access to customer
PI but makes no further use of the data. We agree with AAJ that we must
account for the difficulties a provider faces in determining when
``access translates to acquisition and when acquisition leads to
misuse.'' Our rule appropriately requires providers to issue
notifications in cases where a provider is unable to determine the full
scope and impact of a breach. However, the definition of breach does
not create an obligation to notify customers of an unauthorized gain of
access--such as an employee opening the wrong file--once the provider
reasonably determines that no harm is reasonably likely to occur. This
accords with AT&T, which explains that ``not requiring notification
where a provider determines that there is no reasonable likelihood of
harm to any customer resulting from the breach'' will ``reduce
excessive reporting.''
274. Similarly, our harm-based trigger allays the concern that
extending breach notification obligations beyond CPNI to customer PI
more broadly would vastly expand the range of scenarios where
notification is required. This concern is largely premised on the
assumption that we would require customer notification of all breaches
of customer PI, regardless of the severity of the breach or the
sensitivity of the PI at issue. As explained above, we have instead
adopted a more targeted obligation that takes into account the
potential for customer harm. In addition, we observe that many, if not
all, state data breach notification requirements explicitly include
sensitive categories of PII within their scope. Under our rule,
breaches involving such information would presumptively meet our harm
trigger and thus require notification. We think it is clear that the
unauthorized exposure of sensitive PII, such as Social Security numbers
or financial records, is reasonably likely to pose a risk of customer
harm, and no commenter contends otherwise. We therefore find it
appropriate for our breach notification rule to apply broadly to
customer PI, including PII.
2. Notification to the Commission and Federal Law Enforcement
275. In this section, we describe rules requiring
telecommunications carriers to notify the Commission and federal law
enforcement of breaches of customer PI, under the harm-based
notification trigger discussed above. We also specify the timeframe and
methods by which providers must provide this information.
276. Scope. As proposed in the NPRM, we require notification to the
Commission of all breaches that meet the harm-based trigger and, when
the breach affects 5,000 or more customers, the FBI and Secret Service.
We expect that this notification data will facilitate dialogue between
the Commission and telecommunications carriers, and will prove
extremely valuable to the Commission in evaluating the efficacy of its
data security rules, as well as in identifying systemic negative trends
and vulnerabilities that can be addressed with individual providers or
the industry as a whole including to further the goal of collaborative
improvement and refinement of data security practices. Still, we retain
discretion to take enforcement action to ensure BIAS providers and
other telecommunications carriers are fulfilling their statutory duties
to protect customer information.
277. We adopt an additional trigger of at least 5,000 affected
customers for notification to the Secret Service and FBI, in order to
ensure that these agencies are not inundated with notifications that
are unlikely to have significant law enforcement implications. This
threshold finds support in the comments of the FBI and Secret Service
and is also consistent with or similar to provisions in various
legislative and administration proposals for a federal data breach law.
We recognize that there may be circumstances under which carriers want
to share breach information that does not meet the harm trigger we
adopt today as part of a broader voluntary cybersecurity and threat
detection program, and we encourage providers to continue these
voluntary efforts.
278. Timeframe. The dictates of public safety and emergency
response may require that the Commission and law enforcement agencies
be notified of a breach in advance of customers and the general public.
Thus, for breaches affecting 5,000 or more customers, we require
carriers to notify the Commission, the FBI, and the Secret Service
within seven (7) business days of when the carrier reasonably
determines that a breach has occurred, and at least three (3) business
days before notifying customers. For breaches affecting fewer than
5,000 customers, carriers must notify the Commission without
unreasonable delay and no later than thirty (30) calendar days
following the carrier's reasonable determination
[[Page 87314]]
that a breach has occurred. Both of these thresholds remain subject to
the harm-based trigger. We agree with commenters that the timeline for
data breach notification should not begin when a provider first
identifies suspicious activity. At the same time, we clarify that
``reasonably determining'' a breach has occurred does not mean reaching
a conclusion regarding every fact surrounding a data security incident
that may constitute a breach. Rather, a carrier will be treated as
having ``reasonably determined'' that a breach has occurred when the
carrier has information indicating that it is more likely than not that
there was a breach. To further clarify, the notification timelines
discussed herein run from the carrier's reasonable determination that a
breach has occurred, not from the determination that the breach meets
the harm-based notification trigger.
279. We agree with the FBI and the Secret Service that advance
notification of breaches will enable law enforcement agencies to take
steps to avoid the destruction of evidence and to assess the need for
further delays in publicizing the details of a breach. We reject
arguments that the timeframes for Commission and law enforcement
notification that we adopt are too burdensome. Rather, we agree with
AT&T and other commenters in the record that allowing carriers seven
(7) business days to notify the Commission and law enforcement
furnishes those providers with sufficient time to adequately
investigate suspected breaches. Further, to address concerns expressed
in the record regarding the complexity and costs of data breach
notification for smaller providers, we relax the notification timeframe
for breaches affecting fewer than 5,000 customers. Carriers must notify
the Commission of breaches affecting less than 5,000 customers without
unreasonable delay and no later than thirty (30) calendar days
following the carrier's reasonable determination that a breach has
occurred. We find that a 30-day notification timeframe for breaches
affecting fewer than 5,000 customers provides the Commission with the
data necessary to monitor trends and gain meaningful insight from
breach activity across the country, while at the same time reducing and
simplifying the requirements for all carriers, particularly smaller
providers, whose limited resources might be better deployed toward
remediating and preventing breach activity, particularly in the early
days of addressing a relatively small breach.
280. We also recognize that a carrier's understanding of the
circumstances and impact of a breach may evolve over time. We expect
carriers to supplement their initial breach notifications to the
Commission, FBI, and Secret Service, as appropriate. Early notification
of breaches will improve the Commission's situational awareness and
enable it to coordinate effectively with other agencies, including with
the FBI and Secret Service on breaches not reportable directly to these
agencies that may nevertheless raise law enforcement concerns.
Furthermore, time is of the essence in a criminal investigation.
Learning promptly of a significant, large-scale breach gives law
enforcement agencies an opportunity ``to coordinate their efforts so
that any law enforcement response can maximize the resources available
to address and respond to the intrusion.'' Given the vital interests at
stake in cases where a data breach merits a law enforcement response,
we find that the seven (7) business day reporting deadline for such
breaches is necessary as a matter of public safety and national
security.
281. To further advance the needs of law enforcement, we permit the
FBI or Secret Service to direct a provider to delay notifying customers
and the public at large of a breach for as long as necessary to avoid
interference with an ongoing criminal or national security
investigation. This provision replaces the more prescriptive
requirements in the existing rules specifying the timing and methods
for law enforcement intervention. Consistent with our overall approach
in this proceeding, we adopt rules that incorporate flexibility to
account for changing circumstances. Several commenters agree that this
provision for law enforcement, which is embodied in the existing rules,
remains prudent. We also observe that the laws of several states and
the District of Columbia include similar law enforcement delay
provisions. We are not persuaded that such a provision unduly
interferes with the interests of customers in taking informed action to
protect themselves against breaches. As the FBI and Secret Service
explain, customer notification delays are not routine but are requested
as a matter of practice only in ``exceptional circumstances'' involving
a serious threat of harm to individuals or national security. In
addition, decisions regarding when to publicly disclose details of a
criminal investigation are a matter that lies within the expertise of
law enforcement agencies. We therefore find that the best course is to
defer to the judgment of the FBI and Secret Service on when the
benefits of delaying customer notification outweigh the risks.
282. Method. We will create a centralized portal for reporting
breaches to the Commission and other federal law enforcement agencies.
The Commission will issue a public notice with details on how to access
and use this portal once it is in place. The reporting interface will
include simple means of indicating whether a breach meets the 5,000-
customer threshold for reporting to the FBI and Secret Service. The
creation of this reporting facility will streamline the notification
process, reducing burdens for providers, particularly small providers.
Any material filed in this reporting facility will be presumed
confidential and not made routinely available for public inspection.
3. Customer Notification Requirements
283. In order to ensure that telecommunications customers receive
timely notification of potentially harmful breaches of their customer
PI, we adopt rules specifying how quickly BIAS providers and other
telecommunications carriers must notify their customers of a breach,
the information that must be included in the breach notification, and
the appropriate method of notification.
a. Timeline for Notifying Customers
284. We require BIAS providers and other telecommunications
carriers to notify affected customers of reportable breaches of their
customer PI without unreasonable delay, and no later than 30 calendar
days following the carriers' reasonable determination that a breach has
occurred, unless the FBI or Secret Service requests a further delay.
This approach balances affected customers' need to be notified of
potentially harmful breaches of their confidential information with
carriers' need to properly determine the scope and impact of the
breach, and to the extent necessary, to most immediately focus
resources on preventing further breaches. Also, the specific customer
notification timeline we adopt has broad record support.
285. As an initial matter, we agree with commenters that clear and
straightforward notification deadlines are necessary to ensure that
customers are timely notified of breaches that affect them. We also
agree with commenters that providing more time to notify customers than
the 10 days we initially proposed will enable carriers to conduct a
more thorough and complete investigation of breaches in advance of the
notification. This extra time for
[[Page 87315]]
investigation will minimize duplicative and incomplete breach notices,
avoid customer confusion, allow providers to focus first on stopping
further breaches, and minimize burdens on providers. The FBI and Secret
Service, which have extensive experience with data breach notification
and, more specifically, experience with our existing data breach
notification rules, generally support a customer notification timeframe
of between 10 and 30 days. FTC staff recommends that breach
notifications occur without unreasonable delay, but within an outer
limit of between 30-60 days. State data breach laws vary, but most
states do not require notification within a specific time frame and the
majority of states that do provide 45 days or more to provide notice.
286. Our adoption of a customer notification period longer than
that initially proposed also responds to concerns raised by smaller
carriers. For example, the Rural Wireless Association argues that
``[s]mall BIAS providers need additional time [beyond ten days] to
determine the extent of any breach, as well as to consult with counsel
as to the appropriate next steps.'' The American Cable Association
similarly argues that compliance with a compressed notification
timeline would require small providers ``to divert senior and technical
staff solely to data breach response for the duration of the breach
response period'' and otherwise incur high compliance costs. We are
mindful of the compliance burdens that a 10-day period for customer
notification would impose on small carriers in particular, and
accordingly adopt a more flexible requirement to notify customers of
reportable breaches without unreasonable delay and in any event no
longer than 30 calendar days. These commenters and others proposed
longer notification periods and, alternatively, an open-ended non-
specific timeframe for small providers. While we are sensitive to these
concerns, we also note, however, that customer exposure to avoidable or
mitigable risk continues to grow in the aftermath of a breach. We
therefore emphasize the value of notifying affected customers as soon
as possible to allow the customer to undertake time-sensitive
mitigation activities and encourage carriers to notify consumers as
soon as practicable.
287. Requiring carriers to notify affected customers without
unreasonable delay while adopting a 30 calendar day deadline to do so
creates a backstop against excessive delays in notifying customers. Of
course, if a telecommunications carrier conducts a good faith,
reasonable investigation within 30 calendar days but later determines
that the scope of affected customers is larger than initially known, we
expect that provider to notify those additional customers as soon as
possible. However, based on the record, we find that 30 calendar days
is ample time to prepare a customer notification that meets our minimum
content requirements, as discussed below. Our prior rules did not
specify a precise timeline for customer notice--only that it must occur
after the carrier completes law enforcement notification--and we find
adoption of the timeline above warranted to ensure timely notification
to customers. We recognize that a carrier may identify a breach and
later learn that the scope of the breach is larger than initially
determined. Under such circumstances a carrier has a continuing
obligation to notify without unreasonable delay any additional
customers it identifies as having been affected by the breach, to the
extent the carrier cannot reasonably determine that no harm is
reasonably likely to occur to the newly identified affected customers
as a result of the breach.
b. Information Provided as Part of Customer Breach Notifications
288. To be a useful tool for consumers, breach notifications should
include information that helps the customer understand the scope of the
breach, the harm that might result, and whether the customer should
take any action in response. In the NPRM we proposed that providers
include certain types of basic information in their data breach
notifications to affected customers, and based on the record, we adopt
those same basic requirements, which include the following elements:
The date, estimated date, or estimated date range of the
breach;
A description of the customer PI that was used, disclosed,
or accessed, or reasonably believed to have been used, disclosed, or
accessed, by a person without authorization or exceeding authorization
as a part of the breach of security;
Information the customer can use to contact the
telecommunications carrier to inquire about the breach of security and
the customer PI that the carrier maintains about the customer;
Information about how to contact the Federal
Communications Commission and any state regulatory agencies relevant to
the customer and the service; and
If the breach creates a risk of financial harm,
information about national credit-reporting agencies and the steps
customers can take to guard against identity theft, including any
credit monitoring, credit reporting, or credit freezes the
telecommunications carrier is offering customers affected by the breach
of security.
289. While data breaches are not ``one-size-fits-all,'' creating a
measure of consistency across customer breach notifications will
benefit customers and providers, particularly smaller providers, by
removing any need to reinvent the wheel in the event of a data breach.
Seventeen states and territories currently mandate that specific
content be included in breach notifications and the requirements we
adopt today are generally consistent with those statutes. Much of the
information we require consists of contact information for the
Commission, relevant authorities, credit reporting agencies, and the
carrier itself. Based on the record, we also require customer breach
notifications to contain information about credit freezes and credit
monitoring if the breach creates a risk of financial harm. Several
states currently require data breach notices to contain information
about both credit monitoring and credit freezes. The foregoing elements
should be easy for any provider to ascertain and for customers to
understand. The remaining two elements simply define the basic elements
of a breach notification--when the breach occurred and what information
was breached. Additionally, we hold carriers to a reasonable standard
of accuracy and precision in providing this information. Rather than
having to provide the exact moment a breach occurred, providers are
tasked with giving an ``estimated'' date or, alternatively, an
estimated date ``range.'' Moreover, while a description of the customer
PI involved in the breach should be as detailed, informative, and
accurate as possible, the rule allows for a description of the data the
telecommunications carrier ``reasonably believes'' was used, disclosed,
or accessed.
290. We encourage providers to supplement these minimum elements
with additional information that their customers may find useful or
informative. For example, FTC Staff recommends that notifications
include contact information for the FTC, and a reference to its
comprehensive IdentityTheft.gov Web site. In appropriate cases,
providing such additional information could further empower customers
to take steps to mitigate their own harm and protect themselves against
the effects of any future breaches.
c. Notification Methods
291. As proposed in the NPRM, we require that customer
notifications occur by means of written notification
[[Page 87316]]
to the customer's address of record or email address, or by contacting
the customer by other electronic means of active communications agreed
upon by the customer for contacting that customer for data breach
notification purposes. For former customers, we require carriers to
issue notification to the customer's last known postal address that can
be determined using commonly available sources. These options create
flexibility for providers to notify customers in a manner they choose
to be contacted by their provider, and they are consistent with methods
permitted under other data breach notification frameworks. One of the
few commenters to address this issue supports the NPRM proposal, while
also suggesting that providers post ``substitute breach notifications''
on their Web sites. While some other breach notification frameworks do
include such a requirement, we are not persuaded it is necessary for
our purposes. Telecommunications carriers have direct relationships
with their customers through which they are likely to have ready means
of contacting them. We believe the options discussed above for direct
notification will generally provide a sufficient array of options for
reaching customers affected by a breach, and we thus decline also to
require a broader, less targeted public disclosure.
4. Record Retention
292. We adopt a streamlined version of the record retention
requirement we proposed in the NPRM. We require only that providers
keep record of the dates on which they determine that reportable
breaches have occurred and the dates when customers are notified, and
that they preserve written copies of all customer notifications. These
records must be kept for two years from the date a breach was
reasonably determined to have occurred. The purpose of this limited
requirement is to enable Commission oversight of the customer breach
notifications our rule requires. This minor recordkeeping requirement
will not impose any significant administrative burden on providers. On
the contrary, the information that must be retained must be collected
anyway, is of limited quantity, and largely comprises information we
would expect carriers to retain as a matter of business practice.
Moreover, shortening the retention period would weaken the utility of
the requirement as an enforcement tool, while not delivering any
substantiated cost savings for providers. As a final point, we clarify
that we do not require carriers to retain records of breaches that do
not rise to the level of a required Commission notification. A large
percentage of breaches are therefore likely to be exempted from this
requirement.
5. Harmonization
293. In the NPRM, we proposed adoption of a harmonized breach
notification rule for BIAS and other telecommunications services that
would replace the existing Part 64 rule. Based on the record, we have
determined to take this approach. We agree with commenters who argue
that creating a harmonized rule will enable providers to streamline
their notification processes and will reduce the potential for customer
confusion. Moreover, we find that the modifications we have made to the
proposed rule, particularly the harm trigger we adopt and timeline for
notifying customers, ameliorate concerns that applying the new rule to
both BIAS and other telecommunications services will unduly increase
burdens for voice providers.
G. Particular Practices That Raise Privacy Concerns
294. In this section we prohibit ``take-it-or-leave-it'' offers in
which BIAS providers offer broadband service contingent on customers
surrendering their privacy rights as contrary to the requirements of
sections 222, 201, and 202 of the Act. We also adopt heightened
disclosure and affirmative consent requirements for BIAS providers that
offer customers financial incentives, such as lower monthly rates, in
exchange for the right to use the customers' confidential information.
Congress has tasked the Commission with protecting the public interest,
and we conclude that our two-fold approach to these practices will
permit innovative and experimental service offerings and encourage and
promote customer choice, while prohibiting the most egregious offerings
that would harm the public interest.
1. BIAS Providers May Not Offer Service Contingent on Consumers'
Surrender of Privacy Rights
295. We agree with those commenters that argue that BIAS providers
should not be allowed to condition or effectively condition the
provision of broadband on consenting to use or sharing of a customer's
PI over which our rules provide the consumer with a right of approval.
Consistent with our proposal in the NPRM, we therefore prohibit BIAS
providers from conditioning the provision of broadband service on a
customer surrendering his or her privacy rights. We also prohibit BIAS
providers from terminating service or otherwise refusing to provide
BIAS due to a customer's refusal to waive any such privacy rights. By
design, such ``take-it-or-leave-it'' practices offer no choice to
consumers. The record supports our finding that such practices will
harm consumers, particularly lower-income customers, and we agree with
Atomite that there is a difference between offering consumers ``a
carrot (i.e., consideration in exchange for property rights) and [] a
stick (e.g., no ISP service unless subscribers relinquish their
property rights).'' We therefore conclude that prohibiting such
practices will ensure that consumers will not have to trade their
privacy for broadband services.
296. As we discussed above, broadband plays a pivotal role in
modern life. We find that a ``take-it-or-leave it'' approach to the
offering of broadband service contingent upon relinquishing customer
privacy rights is inconsistent with the telecommunications carriers'
``duty to protect the confidentiality of proprietary information of,
and related to . . . customers.'' Further, we find that a ``take-it-or-
leave-it'' customer acceptance is not customer ``approval'' within the
meaning of section 222(c)(1), which prohibits telecommunications
carriers from using, disclosing, or permitting access to CPNI without
customer approval.
297. We also conclude that requiring customers to relinquish all
privacy rights to their PI to purchase broadband services is an unjust
and unreasonable practice within the meaning of section 201(b). Thus,
we disagree with CTIA's assertions that the ``term `approval' must
reflect the common law contract law principle that neither take-it-or-
leave-it offers nor financial inducements are unconscionable.''
Congress directed the Commission to ``execute and enforce'' the
provisions of the Act, including the prohibition on ``unjust or
unreasonable'' practices. Requiring customers to relinquish privacy
rights in order to purchase broadband services, or other
telecommunications services, would also constitute unjust and
unreasonable discrimination in violation of section 202(a). A take-it-
or-leave-it offering would discriminate unreasonably by offering the
service to potential customers willing and able to relinquish privacy
rights that consumers expect and deserve, and/or that are guaranteed to
them under sections 222 and 201, and not offering the service to
others. Consumers should not have to face such a choice. In the 2015
Open Internet Order, we explained that with respect to BIAS services,
we will evaluate whether a practice is unjust,
[[Page 87317]]
unreasonable, or unreasonably discriminatory using the no-unreasonable
interference/disadvantage standard (general conduct rule). Under this
standard, the Commission can prohibit, on a case-by-case basis,
practices that unreasonably interfere with or unreasonably disadvantage
the ability of consumers to reach the Internet content, services, and
applications of their choosing. In evaluating whether a practice
satisfies this rule, we consider a totality of the circumstances,
looking to a non-exhaustive list of factors. Among these factors are
end-user control, free expression, and consumer protection.
2. Heightened Requirements for Financial Incentive Practices
298. Unlike the ``take-it-or-leave-it'' offers for BIAS discussed
above, the record concerning financial incentives practices is more
mixed. There is strong agreement among BIAS providers, some public
interest groups, and other Internet ecosystem participants that there
are benefits to consumers and companies of allowing BIAS providers the
flexibility to offer innovative financial incentives. The record does,
however, reflect concerns that these programs may be coercive or
predatory in persuading consumers to give up their privacy rights. We
therefore find that that heightened disclosure and affirmative customer
consent requirements will help to ensure that customers' decisions to
share their proprietary information in exchange for financial
incentives are based on informed consent. We limit the heightened
disclosure and consent requirements discussed herein to financial
incentive practices offered by BIAS providers. The record reveals
concerns about these practices specific to BIAS, and as such, we limit
our requirements to such services.
299. As we recognized in the Broadband Privacy NPRM, it is not
unusual for business to give consumers benefits in exchange for their
personal information. For example, customer loyalty programs that track
consumer purchasing habits online and in the brick-and-mortar world are
commonplace. Moreover, the Internet ecosystem continues to innovate in
ways to obtain consumer information such as earning additional
broadband capacity, voice minutes, text messages, or even frequent
flyer airline miles in exchange for personal information. Discount
service offerings can benefit consumers. As MMTC explains, for example,
such programs ``significantly drive online usage'' as well as ``help
financially challenged consumers.''
300. At the same time, the record includes legitimate concerns that
financial incentive practices can also be harmful if presented in a
coercive manner, mislead consumers into surrendering their privacy
rights, or are otherwise abused. This is particularly true, because as
CFC has explained, ``consumers have difficulty placing a monetary value
on privacy'' and often ``have little knowledge of the details or extent
of the personally identifiable data that is collected or shared by
their BIAS providers and others.'' Commenters also raise concerns about
the potential disproportionate effect on low income individuals.
Thirty-eight public interest organizations expressed concern that
financial incentives can result in consumers paying up to $800 per
year--$62 per month--for plans that protect their privacy.
301. Mindful of the potential benefits and harms associated with
financial incentive practices, we adopt heightened disclosure and
choice requirements, which will help ensure consumers receive the
information they need to fully understand the implications of any such
practices and make informed decisions about exchanging their privacy
rights for whatever benefits a provider is offering. We therefore
require BIAS providers offering financial incentives in exchange for
consent to use, disclose, and/or permit access to customer PI to
provide a clear and conspicuous notice of the terms of any financial
incentive program that is explained in a way that is comprehensible and
not misleading. Notices that contain material misrepresentations or
omissions will not be considered accurate. That explanation must
include information about what customer PI the provider will collect,
how it will be used, with what types of entities it will be shared and
for what purposes. The notice must be provided both at the time the
program is offered and at the time a customer elects to participate in
the program. BIAS providers must make financial incentive notices
easily accessible and separate from any other privacy notifications and
translate such notices into a language other than English if they
transact business with customers in that language. When a BIAS provider
markets a service plan that involves an exchange of personal
information for reduced pricing or other benefits, it must also provide
at least as prominent information to customers about the equivalent
plan without exchanging personal information.
302. BIAS providers must also comply with all notice requirements
in Section 64.2003 of our rules when providing a financial incentive
notice. Because of the potential for customer confusion and in keeping
with our overarching goal of giving customers control over the use and
sharing of their personal information, we further require BIAS
providers to obtain customer opt-in consent for participation in any
financial incentive program that requires a customer to give consent to
use of customer PI. Consistent with the choice framework we adopt
today, once customer approval is given, BIAS providers must provide a
simple and easy-to-use mechanism that enables customers to change their
participation in such programs at any time. This mechanism, which may
be the same choice mechanism as the one in Part III.D.4, must be clear
and conspicuous and in language that is comprehensible and not
misleading. The mechanism must also be persistently available on or
through the carrier's Web site; the carrier's application, if it
provides one for account management purposes; and any functional
equivalent of either. If a carrier does not have a Web site, it must
provide its customers with a persistently available mechanism by
another means such as a toll-free telephone number. We find that the
protections outlined herein will encourage consumer choice in
evaluating whether to take advantage of financial incentive programs.
303. We will closely monitor the development of financial incentive
practices, particularly if allegations arise that service prices are
inflated such that customers are essentially compelled to choose
between protecting their personal information and very high prices. We
caution that we reserve the right to take action, on a case-by-case
basis, under sections 201 and 222 against BIAS providers engaged in
financial incentive practices that are unjust, unreasonable,
unreasonably discriminatory, or contrary to section 222. The approach
we take today enables BIAS providers the flexibility to experiment with
innovative financial incentive practices while ensuring that such
practices are neither predatory nor coercive.
H. Other Issues
1. Dispute Resolution
304. In the Broadband Privacy NPRM we sought comment on whether our
current informal complaint resolution process is sufficient to address
customer concerns or complaints with respect to our proposed privacy
and data security rules. At present, customers who experience
violations of any of our rules may file informal complaints through
[[Page 87318]]
the Consumer Inquiries and Complaints Division of the Consumer &
Governmental Affairs Bureau, and carriers may not require customers to
waive, or otherwise restrict their ability to file complaints with or
otherwise contact the Commission regarding violations of their privacy
rights. The record does not demonstrate a need to modify our complaint
process for purpose of the rules we adopt today.
305. On the question of whether BIAS providers should adopt
specific dispute resolution processes, we received significant feedback
both in support of and in opposition to limitations on mandatory
arbitration agreements. Based on that record, we continue to have
serious concerns about the impact on consumers from the inclusion of
mandatory arbitration requirements as a standard part of many contracts
for communications services. The time has come to address this
important consumer protection issue in a comprehensive way. Therefore,
we will initiate a rulemaking on the use of mandatory arbitration
requirements in consumer contracts for broadband and other
communications services, acting on a notice of proposed rulemaking in
February 2017. We observe that the Consumer Financial Protection Bureau
(CFPB)--which has extensive experience with consumer arbitration
agreements and dispute resolution mechanisms--issued a report last year
on mandatory arbitration clauses and is currently engaged in a
rulemaking on the subject in the consumer finance context. We expect
that many of the lessons the CFPB learns and the conclusions it draws
in its rulemaking will be informative and useful.
2. Privacy and Data Security Exemption for Enterprise Voice Customers
306. Having harmonized the current rules for voice services with
the rules we adopt today for BIAS, we revisit and broaden the existing
exemption from our Section 222 rules for enterprise voice customers,
where certain conditions are met. Specifically, we find that a carrier
that contracts with an enterprise customer for telecommunications
services other than BIAS need not comply with the other privacy and
data security rules under part 64, Subpart U of our rules if the
carrier's contract with that customer specifically addresses the issues
of transparency, choice, data security, and data breach; and provides a
mechanism for the customer to communicate with the carrier about
privacy and data security concerns. As with the existing, more limited
business customer exemption from our existing authentication rules,
carriers will continue to be subject to the statutory requirements of
section 222 even where this exemption applies.
307. Our existing voice rules include customer authentication
obligations as a required data security practice, but allow business
customers to bind themselves to authentication schemes that are
different than otherwise provided for by our rules. In adopting an
alternative data security option for authenticating business customers,
the Commission recognized that the privacy concerns of
telecommunications customers are greatest ``when using personal
telecommunications service,'' and ``businesses are typically able to
negotiate the appropriate protection of CPNI in their service
agreements.'' As Level 3 argues in this rulemaking, business customers
have the ``knowledge and bargaining power necessary to contract for
privacy and data security protections that are tailored to meet their
needs.'' Moreover, business customers may have different privacy and
security needs and therefore different expectations. For example,
Verizon explains that ``many businesses may want their CPNI used in
different ways than a typical consumer.'' Allowing sophisticated
enterprise customers to negotiate their own privacy and data security
protections with their carriers will ``allow businesses to tailor how a
telecommunications service provider protects their privacy and data
specifically to their individual needs'' and allow carriers ``to
compete by offering innovative pro-customer options and contracts that
meet business customers' privacy and data security expectations.''
Although the Commission previously limited the enterprise exemption to
authentication, for the reasons above we are convinced to broaden the
exemption to encompass all privacy and data security rules under
section 222 for the provision of telecommunications services other than
BIAS to enterprise customers.
308. To ensure that business customers have identifiable
protections under section 222, we limit the business customer exemption
to circumstances in which the parties' contract addresses the subject
matter of the exemption and provides a mechanism for the customer to
communicate with the carriers about privacy and data security concerns.
The existing exemption applies only if the parties' contract addresses
authentication; in light of the broader scope of the exemption we adopt
today, we now limit the exemption to circumstances in which the
parties' contract addresses transparency, choice, data security, and
breach notification. We reject the contention that we should exempt
enterprise services from our rules entirely with regard to the two
limitations above. The existence of contractual terms between two
businesses addressing privacy ensures that the enterprise customer's
privacy is in fact protected without the need for our rules. We clarify
that the contract at issue need not be a fully negotiated agreement,
but can take the shape of standard order forms. In this regard, as XO
observes, an enterprise carrier would ``face significant liability if
it violated contractual terms governing privacy and data security.'' We
do not provide a business exemption for BIAS services purchased by
enterprise customers, because BIAS services by definition are ``mass
market retail service[s],'' and as such we do not anticipate that it
will be typical for purchasers to negotiate the terms of their
contracts.
309. Regardless of whether the exemption applies, we observe that
carriers remain subject to the statutory requirements of section 222.
This exemption in our rules is thus not tantamount to forbearance from
the statute. We agree with commenters that section 222 provides a solid
legal foundation for carriers and sophisticated business customers to
negotiate adequate and effective service terms on matters of privacy
and data security.
I. Implementation
310. To provide certainty to customers and carriers alike, in this
section we establish a timeline by which carriers must implement the
privacy rules we adopt today. Until these rules become effective,
section 222 applies to all telecommunications services, including BIAS,
and our current implementing rules continue to apply to
telecommunications services other than BIAS and to interconnected VoIP.
Below, we explain when the rules we adopt will be effective, and
address how carriers should treat customer approvals to use and share
customer PI received before the new rules are effective. Finally, we
establish an extended implementation period for small providers with
respect to the transparency and choice requirements we adopt today.
1. Effective Dates and Implementation Schedule for Privacy Rules
311. Swift implementation of the new privacy rules will benefit
consumers. Moreover, carriers that have complied with FTC and industry
best practices will be well-positioned to achieve
[[Page 87319]]
prompt compliance with the privacy rules we adopt today. We recognize,
however, that carriers will need some time to update their internal
business processes as well as their customer-facing privacy policies
and choice mechanisms in order to come into compliance with some of our
new rules. Additionally, some of the new rules will require revised
information collection approval from the Office of Management and
Budget pursuant to the Paperwork Reduction Act (PRA approval), and it
is difficult to predict the exact timeline for PRA approval. PRA
approval, as defined herein, is not complete until the Commission
publishes notice of OMB approval in the Federal Register. We therefore
adopt a set of effective dates for the new rules that is calibrated to
the changes carriers will need to make to come into compliance--
providing a minimum timeframe before which the rules could come into
effect. In order to provide certainty about effective dates, we also
direct the Wireline Competition Bureau (Bureau) to provide advance
notice to the public of the precise date after PRA approval when the
Commission will begin to enforce compliance with each of the new rules.
312. Notice and Choice. The notice and choice rules we adopt today
will become effective the later of (1) PRA approval, or (2) twelve
months after the Commission publishes a summary of the Order in the
Federal Register. This implementation schedule also applies to the
disclosure and consent requirements for financial incentive practices.
We acknowledge that our new notice and choice rules may ``represent a
significant shift in the status quo'' for carriers. Carriers will need
to analyze the new, harmonized privacy rules as well as coordinate with
various business segments and vendors, and update programs and
policies. Carriers will also need to engage in consumer outreach and
education. These implementation steps will take time and we find, as
supported in the record, that twelve months after publication of the
Order in the Federal Register is an adequate minimum implementation
period to implement the new notice and approval rules. In order to
provide certainty, we also direct the Bureau to release a public notice
after PRA approval of the notice and choice rules, indicating that the
rules are effective, and giving carriers a time period to come into
compliance with those rules that is the later of (1) eight weeks from
the date of the public notice, or (2) twelve months after the
Commission publishes a summary of the Order in the Federal Register.
313. Breach Notification Procedures. The data breach notification
rule we adopt today will become effective the later of (1) PRA
approval, or (2) six months after the Commission publishes a summary of
the Order in the Federal Register. We find that six months is an
appropriate minimum implementation period for data breach
implementation. Although providers of telecommunications services other
than BIAS are subject to our current breach notification rule and we
are confident that carriers are cognizant of the importance of data
breach notification in the appropriate circumstances, we recognize that
carriers may have to modify practices and policies to implement our new
rule, we find the harm trigger we adopt and timeline for notifying
customers lessen the implementation requirements. Moreover,
harmonization of our data breach rule for BIAS and voice services
enable providers to streamline their notification processes, which
should also lessen carriers' need for implementation time. Given these
steps to minimize compliance burdens, we find six months is an adequate
minimum timeframe. We also direct the Bureau to release a public notice
after PRA approval of the data breach rule, indicating that the rule is
effective, and giving carriers a time period to come into compliance
with the rule that is the later of (1) eight weeks from the date of the
public notice, or (2) six months after the Commission publishes a
summary of the Order in the Federal Register.
314. Data Security. The specific data security requirements we
adopt today will become effective 90 days after publication of a
summary of the Order in the Federal Register. We find this to be an
appropriate implementation period for the data security requirements
because as discussed above, carriers should already be largely in
compliance with these requirements because the reasonableness standard
adopted in this Order provides carriers flexibility in how to approach
data security and resembles the obligation to which they were
previously subject pursuant to section 5 of the FTC Act. We therefore
do not think the numerous steps outlined by commenters that would have
been necessary to comply with the data security proposals in the NPRM
apply to the data security rule that we adopt. Nevertheless, we
encourage providers, particularly small providers, to use the adoption
of the Order as an opportunity to revisit their data security practices
and therefore provide an additional 90 days subsequent to Federal
Register publication in which carriers can revisit their practices to
ensure that they are reasonable, as provided for in this Order.
315. Prohibition on Conditioning Broadband Service on Giving up
Privacy. The prohibition on conditioning offers to provide BIAS on a
customer's agreement to waive privacy rights will become effective 30
days after publication of a summary of this Order in the Federal
Register. We find that unlike the other privacy rules, consumers should
benefit from this prohibition promptly. As discussed above, we find
that these ``take-it-or-leave-it'' offers give consumers no choice and
require them to trade their privacy for access to the Internet. As
supported in the record, these practices would harm consumers,
particularly lower-income customers. We therefore find no basis for any
delay in the effective date of this important protection. Further,
prompt implementation will not create any burdens for carriers that are
committed to providing their customers with privacy choices. All other
privacy rules adopted in the Order will be effective 30 days after
publication of a summary of the Order in the Federal Register.
2. Uniform Timeline for BIAS and Voice Services
316. We adopt a uniform implementation timetable for both BIAS and
other telecommunications services. Implementing our rules for all
telecommunications services simultaneously will help alleviate
potential customer confusion from disparate practices between services
or carriers. This approach will support the benefits of harmonization
discussed throughout this Order and is strongly supported in the
record. We emphasize that until the new privacy rules are effective and
implemented with respect to voice services, the existing rules remain
in place. Further, we make clear that all carriers, including BIAS
providers, remain subject to section 222 during the implementation
period that we establish and beyond.
3. Treatment of Customer Consent Obtained Prior to the Effective and
Implementation Date of New Rule
317. We recognize that our new customer approval rule requires
carriers to modify the way they obtain consent for BIAS and voice
services based on our sensitivity-based framework discussed above. We
seek to minimize disruption to carriers' business practices and
therefore do not require carriers to obtain new consent from all their
customers. Rather, for BIAS, we treat as valid or ``grandfather'' any
consumer consent that was obtained prior to the
[[Page 87320]]
effective date of our rules and that is consistent with our new
requirements. For example, if a BIAS provider obtained a customer's
opt-in consent to use that individual's location data to provide
coupons for nearby restaurants and provided adequate notice regarding
his or her privacy rights, then the customer's consent would be treated
as valid. The consent would not be invalidated simply because it
occurred before the new customer approval rule became effective.
However, if the customer consent was not obtained in the manner
contemplated by our new rule, a new opportunity for choice is required.
We recognize that consumers whose opt-in or opt-out consent is
grandfathered may not be aware of our persistent choice requirement,
and therefore we direct the Consumer and Governmental Affairs Bureau to
work with the industry to engage in a voluntary consumer education
campaign.
318. We decline to more broadly grandfather preexisting consents
obtained by small BIAS providers. WTA argues that the Commission should
permit ``small BIAS providers to grandfather existing opt-out approvals
as it has done in the past'' citing the Commission's 2002 CPNI Order,
in which the Commission allowed carriers to use preexisting opt-out
approval with the limitation that such approval only be used for
marketing of communications-related services by carriers, their
affiliates that provide communications-related services, and carriers'
agents, joint venture partners and independent contractors. We find
that the parameters set forth above create the appropriate balance to
limit compliance costs with our new notice and customer approval rules
while providing consumers the privacy protections they need. As we
explain above, BIAS providers are in a unique position as gateways to
the Internet and we need to ensure consumers are aware of their privacy
rights and have the ability to choose how their personal information is
used and shared.
319. As with BIAS services, customer consent obtained by providers
of other telecommunications services subject to the legacy rules
remains valid for the time during which it would have remained valid
under the legacy rules. As such, opt-out consent obtained before the
release date of this order remains valid for two years after it was
obtained, after which a carrier must conform to the new rules. Opt-in
consent that is valid under the legacy rules remains valid. This
approach is consistent with established customer expectations at the
time the consent was solicited, and should reduce notice fatigue.
Maintaining the validity of customer consent for voice services will
also help reduce the up-front cost of compliance of the new rules. We
reiterate that a customer's preexisting consent is valid only within
its original scope. For instance, if a carrier previously received a
customer's opt-in consent to use information about the characteristics
of the customer's service to market home alarm services, the carrier
could not claim that same consent applies to use of different customer
PI (e.g., a Social Security Number) or a different use or form of
sharing (e.g., selling to a data aggregator). Similarly, opt-out
consent to use and share CPNI to market communications-related services
could not be used to support use of different customer PI or different
forms of use or sharing (e.g., marketing non-communications-related
services).
4. Limited Extension of Implementation Period for Small Carriers
320. In the NPRM we sought comment on ways to minimize the burden
of our proposed privacy framework on small providers, and throughout
this Order we have identified numerous ways to reduce burdens and
compliance costs while providing robust privacy protections to their
customers. To further address the concerns raised by small providers in
the record, we provide small carriers an additional twelve months to
implement the notice and customer approval rules we adopt today. CCA
asserts that ``any compliance burdens produced by privacy rules will be
compounded by many additional regulations including Title II
regulation, enhanced transparency rules, and outage reporting
requirements.'' Consideration of the effect of separate requirements
was taken into account in developing this implementation plan.
321. We find that an additional one-year phase-in will allow small
carriers--both broadband providers and voice providers--time to make
the necessary investments to implement these rules. The record reflects
that small providers have comparatively limited resources and rely
extensively on vendors over which they have limited leverage to compel
adoption of new requirements. We recognize our notice and choice
framework may entail up-front costs for small providers. We also agree
with NTCA that small providers will ``be aided by observing and
learning from the experience of larger firms who by virtue of their
size and scale are better position to absorb the learning curve.'' As
such, we find that this limited extension is appropriate.
322. For purposes of this extension, we define small BIAS providers
as providers with 100,000 or fewer broadband connections and small
voice providers with 100,000 or fewer subscriber lines as reported on
their most recent Form 477, aggregated over all the providers'
affiliates. In the NPRM we sought comment on whether we should exempt
carriers that collect data from fewer than 5,000 customers a year
provided they do not share customer data with third parties. Commenters
objected that the 5,000 threshold was too narrow to accurately identify
small providers and that the limitation on information sharing was too
restrictive. We therefore find that given the limited scope of relief
granted to small carriers, increasing the numeric scope from the 5,000
to 100,000 is suitable because it will benefit additional providers
without excess consumer impact. We also decline to count based on the
number of customers from whom carriers collect data, as we recognize
that some data collection is necessary to the provision of service.
Additionally, we decline to impose any requirement that small providers
not share their information with third parties to qualify for the
exception. Moreover, cabining the scope of this limited extension to
providers serving 100,000 or fewer broadband connections or voice
subscriber lines is consistent with the 2015 Open Internet Order, in
which we adopted a temporary exemption from the enhancements to the
transparency rule for BIAS providers with 100,000 or fewer broadband
subscribers. Therefore for these reasons, and the critical importance
of privacy protections to consumers, we decline to adopt CCA's
recommendation to define small BIAS providers as either companies with
up to 1,500 employees or serving 250,000 subscribers or less.
323. We decline to provide any longer or broader extension periods
or exemptions to our new privacy rules. We find that our
``reasonableness'' approach to data security mitigates small provider
concern about specific requirements, such as annual risk assessments
and requiring specific privacy credentials. Moreover, as advocated by
small carriers, we adopt a customer choice framework that distinguishes
between sensitive and non-sensitive customer information, as well as
decline to mandate a customer-facing dashboard to help manage their
implementation and compliance costs. Furthermore, we find our data
breach notification requirements and ``take-it-or-leave-it''
prohibition do not require
[[Page 87321]]
an implementation extension as compliance with these protections should
not be costly for small carriers that generally collect less customer
information and use customer information for narrower purposes. Also,
although smaller in company size and market share, small carriers still
retain the ability to see and collect customer personal information and
therefore, it is appropriate to extend these important protections to
all customers on an equal timeframe.
J. Preemption of State Law
324. In this section, we adopt the proposal in the NPRM and
announce our intent to preempt state privacy laws, including data
security and data breach laws, only to the extent that they are
inconsistent with any rules adopted by the Commission. State law
includes any statute, regulation, order, interpretation, or other state
action with the force of law. This limited application of our
preemption authority is consistent with our precedent in this area. We
have long appreciated and valued the important role states play in
upholding the pillars of privacy and protecting customer information.
As the Office of the New York Attorney General has explained, the State
AGs are ``active participants in ensuring that [their] citizens have
robust privacy protections'' and it is critical that they continue that
work. As such, we further agree with the New York Attorney General's
Office that ``it is imperative that the FCC and the states maintain
broad authority for privacy regulation and enforcement.'' We also agree
with those providers and other commenters that argue that neither
telecommunications carriers nor customers are well-served by providers
expending time and effort attempting to comply with conflicting privacy
requirements. We therefore codify a very limited preemption rule that
is consistent with our past practice with respect to rules implementing
section 222. By allowing states to craft and enforce their own laws
that are not inconsistent with our rules with respect to BIAS
providers' and other telecommunications carriers' collection, use, and
sharing of customer information, we recognize and honor the important
role the states play in protecting the privacy of their customer
information.
325. As the Commission has previously explained, we may preempt
state regulation of intrastate telecommunications matters ``where such
regulation would negate the Commission's exercise of its lawful
authority because regulation of the interstate aspects of the matter
cannot be severed from regulation of the intrastate aspects.'' We
reject ITTA's argument that we lack authority to preempt inconsistent
state laws regarding non-CPNI customer PI because its argument is
premised on the incorrect assumption that our legal authority under
section 222 is limited to CPNI. In this case, we apply our preemption
authority to the limited extent necessary to prevent such instances of
incompatibility. Where state privacy laws do not create a conflict with
federal requirements, providers must comply with federal law and state
law.
326. As we have in the past, we will take a fact-specific approach
to the question of whether a conflict between our privacy rules and
state law exists. The Commission reviews petitions for preemption of
CPNI rules on a case-by-case basis. If a provider believes that it is
unable to comply simultaneously with the Commission's rules and with
the laws of another jurisdiction, the provider should bring the matter
to our attention in an appropriate petition. Examining specific
conflict issues when they arise will best ensure that consumers receive
the privacy protections they deserve, whether from a state source or
from our rules.
327. The states have enacted many laws aimed at ensuring that their
citizens have robust privacy protections. We agree with the
Pennsylvania Attorney General that it is important that we not
``undermine or override state law providing greater privacy protections
than federal law,'' or impede the critical privacy protections states
continue to implement. Rather, as supported in the record, we encourage
the states to continue their important work in the privacy arena, and
adopt an approach to preemption that ensures that they are able to do
so. In so doing, we reaffirm the Commission's limited exercise of our
preemption authority to allow states to adopt consumer privacy
protections that are more restrictive than those adopted by the
Commission provided that regulated entities are able to comply with
both federal and state laws.
328. In taking this approach, we reject ACA's suggestion that we
should ``preempt state data breach notification laws entirely.'' As
stated above, we continue to provide states the flexibility to craft
and enforce their own privacy laws, and therefore we only preempt state
laws to the extent that they impose inconsistent requirements. Our
privacy rules are designed to promote ``cooperative federalism'' and
therefore unless providers are unable to comply with both the
applicable state and Commission requirements, we find it inappropriate
to categorically preempt these state data breach laws.
329. Commenters have identified data breach notification as one
area where conflicts may arise. We agree with commenters that it is
generally best for carriers to be able to send out one customer data
breach notification that complies with both state and federal laws, and
we welcome state agencies to use our data breach notification rules as
a model. However, we recognize that states law may require differently
timed notice or additional information than our rules, and we do not
view such privacy-protective requirements as necessarily inconsistent
with the rules we adopt today since carriers are capable of sending two
notices at two different times. However, in the interest of efficiency
and preventing notice fatigue, we invite carriers that find themselves
facing requirements to send separate consumer data breach notices to
fulfill their federal and state obligations to come to the Commission
with a proposed waiver that will enable them to send a single notice
that is consistent with the goals of notifying consumers of their data
breach. Additionally, as explained by CTIA, a situation could arise
where a state law enforcement agency requests a delay in data breach
notice due to an ongoing investigation. We encourage both carriers and
state law enforcement officials to come to the Commission in such a
situation, as we have authority to waive our rules for good cause and
recognize the importance of avoiding interference with a state
investigation.
330. We clarify that we apply the same preemption standard to all
aspects of our section 222 rules. Although the Commission, in its
previous orders, had applied its preemption standard with respect to
all of the section 222 rules, the preemption requirement is currently
codified at section 64.2011 of our rules, which addresses notification
of data breaches. Recognizing that states are enacting privacy laws
outside of the breach notification context, and consistent with
historical Commission precedent, we conclude that the preemption
standard should clearly apply in the context of all of the rules we
adopt today implementing section 222. Therefore, as we proposed in the
NPRM, we remove the preemption provision from that section of our
rules, and adopt a new preemption section that will clearly apply to
all of our new rules for the privacy of customer proprietary
information. In doing so, we enable states to continue their important
role in privacy protection.
[[Page 87322]]
331. Further, we find that the same preemption standard should
apply in both the voice and BIAS contexts to help provide certainty and
consistency to the industry. Accordingly, we adopt a harmonized
preemption standard across BIAS and other telecommunications services.
By applying the same preemption standard to BIAS providers and to other
telecommunications carriers, we ensure that states continue to serve a
role in tandem with the Commission, regardless of the specific service
at issue.
IV. Legal Authority
332. In this Report and Order, we implement Congress's mandate to
ensure that telecommunications carriers protect the confidentiality of
proprietary information of and relating to customers. As explained in
detail below, the privacy and security rules that we adopt are well-
grounded in our statutory authority, including but not limited to
section 222 of the Act.
A. Section 222 of the Act Provides Authority for the Rules
333. Section 222 of the Act governs telecommunications carriers in
their use, disclosure, and protection of proprietary information that
they obtain in their provision of telecommunications services. The
fundamental duty this section imposes on each carrier, as stated in
section 222(a), is to ``protect the confidentiality of proprietary
information of, and relating to'' customers, fellow carriers, and
equipment manufacturers. Section 222(c) imposes more specific
requirements with regard to a subset of customers' proprietary
information, namely customer proprietary network information. This
Report and Order implements section 222 as to customer PI, a category
that includes individually identifiable CPNI and other proprietary
information that is ``of, and relating to'' customers of
telecommunications services. As explained below, the rules we adopt
today are faithful to the text, structure, and purpose of section 222.
1. Section 222 Applies to BIAS Providers Along With Other
Telecommunications Carriers
334. We begin by reaffirming our conclusion in the 2015 Open
Internet Order that section 222 applies to BIAS providers. In so doing,
we reject the view that Section 222 applies only to voice telephony.
The 2015 Open Internet Order reclassified BIAS as a telecommunications
service, making BIAS providers ``telecommunications carriers'' insofar
as they are providing such service. Section 222(a) imparts a general
duty on ``[e]very telecommunications carrier,'' while other subsections
specify the duties of ``a telecommunications carrier'' in particular
situations. The term ``telecommunications carrier'' has long included
providers of services distinct from telephony, including at the time of
section 222's enactment. Thus, in construing the term for purposes of
Section 222, we see no reason to depart from the definition of
``telecommunications carrier'' in Section 3 of the Act. To the
contrary, deviating from this definition without a clear textual basis
in section 222 would create uncertainty as to the scope of numerous
provisions in the Act, regulatory imbalance between various
telecommunications carriers, and a gap in Congress's multi-statute
privacy regime. Moreover, commenters cite no evidence that the term
``telecommunications carrier'' is used more restrictively in section
222 than elsewhere in the Act.
335. We similarly reject the claim that in reclassifying BIAS we
have improperly exercised our ``definitional authority'' to expand the
scope section 222. The relevant term that defines the scope of section
222 is ``telecommunications carrier,'' and we simply are applying the
holding of the 2015 Open Internet Order that this statutory term
encompasses BIAS. Nor does the fact that Section 230 of the Act uses
the term Internet, while Section 222 does not, compel us to disregard
the clear uses of ``telecommunications carrier'' in Section 222.
336. We also reject arguments that ``telephone-specific
references'' contained in Section 222 serve to limit the scope of the
entire section to voice telephony or related services. This argument
misconstrues the structure of Section 222. As explained in more detail
below, Section 222(a) imposes a broad general duty to protect
proprietary information while other provisions impose more-specific
duties. Some of these more-specific duties concerning CPNI are indeed
relevant only in the context of voice telephony. But their purpose is
to specify duties that apply in that limited context, not to define the
outer bounds of Section 222. The definition of CPNI found in section
222(h)(1) illustrates this point. We need not and do not construe BIAS
as a ``local exchange service,'' ``telephone exchange service,'' or
``telephone toll service'' in order to bring it within the reach of
section 222. Provisions of the statute that apply only to such limited
categories, or to carriers that provide services in such categories,
are not part of the statutory basis for any rules we adopt in this
Report and Order as to BIAS. Rather, the rules we adopt for BIAS are
rooted only in those aspects of section 222 that govern
``telecommunications carriers'' and ``telecommunications services''
writ large. While the term is defined in section 222(h)(1)(B) to
include ``the information contained in the bills pertaining to
telephone exchange service or telephone toll service'' and to exclude
``subscriber list information''--categories that have no relevance for
BIAS--pursuant to section 222(h)(1)(A) the term CPNI also includes a
broader category of information that carriers obtain by virtue of
providing a telecommunications service. This broader category
articulated in section 222(h)(1)(A) pertains to ``telecommunications
service[s]'' in general, not only to telephony. As we have explained
above, BIAS providers collect significant amounts of information that
qualifies as CPNI under the broad, functional definition articulated in
Section 222(h)(1)(A). Whether BIAS providers also issue telephone bills
or publish directories makes no difference. The reference to
``call[s]'' in Section 222(d)(3) is similarly inapposite as to the
scope of Section 222 as a whole. The ``call[s]'' at issue in this
provision are customer service calls initiated by the customer; a
customer of any service, including BIAS, can make such a call.
337. If anything, the placement of references to telephony in
section 222 supports our reading of that section as reaching beyond
telephony. Such terms are used to define narrow provisions or
exceptions, but not the outer contours of major components of the
statute. Most significantly, the broad term ``telecommunications
carrier'' is used in defining the general duty under subsection (a);
the obligation to seek customer approval for use, disclosure, or
permission of access to individually identifiable CPNI under paragraph
(c)(1); the obligation to disclose CPNI upon request under paragraph
(c)(2); and the grant of permission to use and disclose ``aggregate
customer information'' under paragraph (c)(3).
338. Where a component of section 222 applies only to a subset of
telecommunications carriers, Congress used a term to apply such a
limit. For instance, section 222(c)(3) permits all telecommunications
carriers to use and disclose aggregate customer information, but
``local exchange carrier[s]'' can do so only on the condition that they
make the information available to others on reasonable and
nondiscriminatory
[[Page 87323]]
terms. The inclusion of a pro-competitive condition in Section
222(c)(3) that applies only to local exchange carriers is consistent
with other provisions of the 1996 Act directed at opening local
telephone markets to competition. But the limited scope of this
condition does not serve to limit the applicability of Section 222 as a
whole. Indeed, not even section 222(c)(3) itself is limited in scope to
providers of local exchange service. Rather, its primary purpose is to
clarify that telecommunications carriers may use and disclose customer
information when it takes the form of ``aggregate customer
information.'' BIAS providers commenting in this proceeding have
expressed a strong interest in being able to use and disclose such
information. As telecommunications carriers, their ability to do so is
made clear under section 222(c)(3).
339. Similarly, the limited scope of providers covered by the duty
to share ``subscriber list information'' under section 222(e) is
commensurate with the scope of the problem being addressed, namely in
the publication of telephone directories. In particular, the
``telephone exchange service'' providers subject to unbundling and
nondiscrimination requirements by the provision are those that would
have the ``subscriber list information'' needed to produce these
directories. The fact that section 222 includes provisions to address
such telephone-specific concerns does not change its overall character
as a privacy protection statute for telecommunications, one that has as
much relevance for BIAS as it does for telephone service.
340. We disagree with the view that Congress confirmed section 222
as a telephone-specific statute when it amended subsections 222(d)(4),
(f)(1) and (g) as part of the New and Emerging Technologies 911
Improvement Act of 2008 (NET 911 Act). These provisions of section 222
establish rights and obligations regarding carrier disclosure of
customer information to assist in the delivery of emergency services.
The NET 911 Act brought ``IP-enabled voice service[s]'' within their
scope. Amending section 222 in this manner addressed a narrow but
critical public safety concern: IP-enabled voice services were emerging
as a platform for delivery of 911 service, yet providers of these
services were not classified as ``telecommunications carriers'' subject
to section 222. The NET 911 Act amendments ensure that all IP-enabled
voice services, even to the extent they are not telecommunications
services, are treated under section 222 much the same as traditional
telephony services for purposes related to E911 service. This treatment
has nothing to do with the extent to which telecommunications services
that are not voice services are subject to section 222. We have
exercised our ancillary jurisdiction to apply rules adopted under
section 222 to providers of interconnected VoIP services.
341. In addition, we observe that none of the references to
telephone-specific services in section 222 that commenters identify are
found in section 222(a). As explained below, we construe section 222(a)
as a broad privacy protection mandate that extends beyond the specific
duties articulated in sections 222(b) and (c). Thus, even if commenters
could establish that these more specific parts of section 222 are
qualified in ways that limit their scope to voice telephony or related
services, or that exclude BIAS from their scope, we would still find
that a BIAS provider--like ``[e]very telecommunications carrier''--has
customer privacy obligations under section 222(a). And if we accept
commenters' view that the role of section 222(a) in the statute is to
identify ``which entities'' have duties thereunder, it follows that
subsections (b) and (c) apply not only to telephony or voice providers
but to ``every telecommunications carrier.''
342. Finally, we dismiss efforts to conflate section 222 with its
implementing rules. When we forbore from application of the existing
implementing rules to BIAS, we made clear that the statute itself still
applies. Commenters do not present any compelling reason to revisit
this decision.
2. Section 222(a) Provides Authority for the Rules as to Customer PI
343. We next conclude that section 222(a) provides legal authority
for our rules. As explained below, section 222(a) imposes an
enforceable duty on telecommunications carriers that is more expansive
than the combination of duties set forth subsections (b) and (c). We
interpret these subsections as defining the contours of a carrier's
general duty under section 222(a) as it applies in particular contexts,
but not as coterminous with the broader duty under section 222(a). On
the contrary, we construe section 222(a) as imposing a broad duty on
carriers to protect customer PI that extends beyond the narrower scope
of information specified in section 222(c). We also find that the rules
adopted in this Report and Order to ensure the protection of customer
PI soundly implement section 222(a).
a. Section 222(a) Imposes on Telecommunications Carriers an Enforceable
Duty To ``Protect the Confidentiality'' of ``Proprietary Information''
344. Section 222(a) states that ``[e]very telecommunications
carrier has a duty to protect the confidentiality of proprietary
information of, and relating to'' customers, fellow carriers, and
equipment manufacturers. In this Report and Order we adopt the most
straightforward interpretation of this text by finding that section
222(a) imposes a ``duty,'' on ``every telecommunications carrier.'' A
``duty'' is commonly understood to mean an enforceable obligation. It
is well-established that the Commission may adopt rules to implement
and enforce an obligation imposed by the Act, including section 222(a).
The substance of the duty is to ``protect the confidentiality of
proprietary information''--all ``proprietary information'' that is
``of, and relating to,'' the specified entities, namely ``other
telecommunications carriers, equipment manufacturers, and customers.''
This Report and Order implements section 222(a) with respect to
``customers,'' defining the term ``customer PI'' to mean that which is
``proprietary information of, and relating to . . . customers.'' The
term is thus firmly rooted in the language of section 222(a).
345. The duty set forth in section 222(a) concerns information
``of, and relating to'' customers and other covered entities. The
Supreme Court has held that ``the ordinary meaning of [the phrase
`relat[ing] to'] is a broad one,'' and in certain contexts it has
described the phrase as ``deliberately expansive'' and ``conspicuous
for its breadth.'' The record contains no evidence that Congress
intended the phrase ``relating to'' to be construed more narrowly for
purposes of section 222(a) than it would be ordinarily. Thus, the most
natural reading of section 222(a) is that it imposes a broad duty on
telecommunications carriers to protect proprietary information, one
that is informed by but not necessarily limited to the more specific
duties laid out in subsections (b) and (c).
346. The treatment of ``equipment manufacturers'' under section 222
provides further evidence for this interpretation. This term is used
only once: section 222(a) includes ``equipment manufacturers'' among
the classes of entities owed confidentiality protections as part of a
carrier's ``general'' duty. While Sections 222(b) and (c) specify in
greater detail how this
[[Page 87324]]
duty applies with respect to customers and fellow carriers--the other
entities protected under section 222(a)--there is no further statutory
guidance on what carriers must do to protect the proprietary
information of equipment manufacturers. Thus, the duty imposed on
carriers under section 222 with regard to equipment manufacturers must
have its sole basis in section 222(a). This would not be possible
unless section 222(a) were read to confer enforceable obligations that
are independent of, and that exceed, the requirements of subsections
(b) and (c). We reject any argument that the reference in section
222(a) to equipment manufacturers is nothing more than a cross-
reference to obligations contained in Section 273. Such an
interpretation would give no independent meaning to section 222(a), and
therefore would be inconsistent with established principles of
statutory construction. It would also be contrary to the plain meaning
of section 222(a), which contains no reference to and is plainly
broader than Section 273; nothing in section 273 applies broadly to
every telecommunications carrier, as section 222(a) clearly does.
347. Nothing in the statutory text or structure of section 222
contradicts this interpretation. To the contrary, this plain language
interpretation is further supported by the structure of section 222 and
consistent with approaches used in other parts of the Act. Section
222(a)'s heading ``In General'' suggests a general ``duty,'' to be
followed by specifics as to particular situations. Section 222(a) is
not given a heading such as ``Purpose'' or ``Preamble'' that would
indicate that the ``duty'' it announces is merely precatory or an inert
``statement of purpose.'' Section 251 of the Act is structured
similarly in this regard, and there is no argument that the duty
announced in Section 251(a) is merely precatory. Also, like in section
222, the ``general duty'' announced in subsection (a) of section 251 is
accompanied by more specific duties announced in the subsections that
follow. In addition, there is no textual indication that sections
222(b) and (c) define the outer bounds of section 222(a)'s scope. For
instance, section 222(a) does not include language such as ``as set
forth below'' or ``as set forth in subsections (b) and (c).'' We also
dismiss as irrelevant CTIA's observation that some provisions of the
1996 Act ``can be interpreted as general statements of policy, rather
than as grants of additional authority.'' That fact alone would have no
bearing on how to interpret section 222(a), which employs ``regulatory
terminology'' in imparting a general ``duty'' on telecommunications
carriers. Finally, our interpretation of subsection (a) does not render
subsection (b) or (c) superfluous. The latter subsections directly
impose specific requirements on telecommunications carriers to address
concerns that were particularly pressing at the time of section 222's
enactment. Our reading of section 222(a) preserves the role of each of
these provisions within the statute, while also allowing the Commission
to adopt broader privacy protections to keep pace with the evolution of
telecommunications services.
348. As Public Knowledge argues, the breadth of the duty announced
in section 222(a) is consistent with a broad understanding of the
purpose of section 222. We agree that this subsection endows the
Commission with a continuing responsibility to protect the privacy
customer information as telecommunications services evolve. Congress's
inclusion in section 222 of more specific provisions to address issues
that were ``front-and-center'' at the time of the 1996 Act's enactment
in no way detracts from this broader purpose.
349. Our interpretation of section 222(a) is far from novel. Other
provisions of the Act set forth a general rule along with specific
instructions for applying the rule in particular contexts. CTIA
attempts to distinguish other such provisions by arguing that they do
not ``define in their subsequent subsections the duties of different
regulated entities identified in their initial subsections.'' In fact,
section 251 does define specific duties of different regulatees in
subsections (b) (all local exchange carriers) and (c) (incumbent local
exchange carriers), and section 628 does apply specific duties to cable
operators, satellite cable programming vendors, and common carriers. In
any event, CTIA does not explain what it believes to be the
significance of this distinction. We agree with Public Knowledge that,
in addition to section 251, another provision that bears a particularly
close resemblance to Section 222 in this regard is section 628.
Subsection (b) of this provision imposes a general ``prohibition'' on
cable operators from interfering with competitors' ability to provide
satellite cable or satellite broadcast programming. Subsection (c) in
turn directs the Commission to adopt rules to implement this
prohibition and specifies their ``minimum contents.'' As a general
matter, the ``minimum'' regulations required under section 628(c) are
aimed at preventing cable operators from denying their competitors
access to programming. In 2009, the D.C. Circuit upheld Commission
rules adopted under section 628(b) that prevented cable operators from
entering exclusivity agreements with owners of multi-unit buildings, an
anti-competitive practice that is only tenuously related to the
``minimum'' regulations implemented under section 628(c). Taking note
of section 628(b)'s ``broad and sweeping terms,'' the court ruled that
``nothing in the statute unambiguously limits the Commission to
regulating practices'' related to the ``principal evil that Congress
had in mind'' when enacting Section 628, as expressed in subsection
(c). Rather, it held that the Commission's ``remedial powers'' to
enforce subsection (b) reached beyond circumstances that Congress
``specifically foresaw.'' Similarly, we agree with OTI that the
``principal'' focus of section 222 on regulating CPNI to promote
competition and consumer protection in emerging telecommunications
markets must be read in harmony with the ``broad and sweeping'' mandate
of section 222(a). In construing the latter we must give effect to the
``actual words'' of the provision. These words plainly impose a
``duty'' on ``every telecommunications carrier.''
350. Even if there were some ambiguity in the text, commenters that
oppose our interpretation of section 222(a) have failed to offer a
compelling alternative interpretation. One proposed alternative is that
section 222(a) merely confirms Congress's intent that the newly enacted
section 222 would apply to ``every telecommunications carrier,''
including not only the legacy carriers subject to then-existing CPNI
requirements but also ``the new entrants that the 1996 Act
envisioned.'' Verizon argues that both the House bill and the Senate
bill originally would have protected a category of customer information
broader than the eventual definition of CPNI, but that ``Congress
ultimately rejected both approaches.'' There is no evidence that
Congress would have, without explanation, adopted an approach that is
narrower than either chamber's bill. And, in fact, the Senate bill
(which, as Verizon points out, was intended to apply broadly to
``customer-specific proprietary information,'' S. Rep. No. 104-23 at
24), contained in its text language almost identical to what Congress
ultimately enacted, creating ``a duty to protect the confidentiality of
proprietary information relating to other common carriers, to equipment
manufacturers, and to customers.'' Similar arguments in the record are
that section 222(a)
[[Page 87325]]
``identifies which entities have responsibility to protect information,
and informs the reading of subsequent subsections, which articulate how
these entities must protect information,'' or that the provision
``merely identifies the categories of information to which section 222
applies.'' These arguments are unconvincing. First, subsections (b) and
(c) themselves are written broadly to apply to ``telecommunications
carrier[s].'' There is no textual basis for interpreting either
provision as applying only to a legacy subset of carriers, such as the
Bell Operating Companies, AT&T, and GTE. Subsections (b) and (c) also
specify the categories of information to which each applies, without
reference to subsection (a). Thus, commenters' proposals for
interpreting section 222(a) would render that provision superfluous,
contrary to the canon against such interpretations. Moreover, the
statute does not expressly link the duty announced in section 222(a)
with the subsections that follow. That is, the statute does not direct
``every telecommunications carrier'' to protect proprietary information
``in accordance with subsections (b) and (c)'' or anything similar.
351. Nor does our interpretation of section 222(a) vitiate any
other elements of Section 222. On the contrary, we read section 222(a)
as imposing a broad duty that can and must be read in harmony with the
more specific mandates set forth elsewhere in the statute. Accordingly,
we need not and do not construe section 222(a) so broadly as to
prohibit any sharing of subscriber information that subsection (e) or
(g) would otherwise require. That is, subsection (a)'s duty to protect
the confidentiality of customer PI is in no way inconsistent with
subsection (e)'s duty to share SLI, which by definition is published
and therefore is not confidential. Nor is it inconsistent with
subsection (g)'s duty to share subscriber information ``solely for
purposes of delivering or assisting in the delivery of emergency
services.'' Indeed, far from ``render[ing] null'' subsections (e) and
(g), our reasoned interpretation of section 222(a) preserves the full
effect of both of these provisions. We thus reject the argument that
subsection (a)'s absence from the ``notwithstanding'' clauses of
subsections (e) and (g) should be taken as evidence that the former
provision confers no ``substantive regulatory authority.'' Rather,
there was simply no need for Congress to have included subsection (a)
in these clauses. Also, the mere omission of section 222(a) from the
these clauses would have been an exceedingly oblique and indirect way
of settling upon an interpretation of section 222(a) that runs counter
to its plain meaning. Relatedly, there is no conflict because our
understanding of section 222(a) does not override any of the exceptions
to section 222(c) set forth in section 222(d). For example, a carrier
need not fear that its disclosure of CPNI ``to initiate, render, bill
[or] collect for telecommunications services'' as subsection (d)
permits might independently violate section 222(a), because such
disclosure is not inconsistent with the carrier's duty to protect the
confidentiality of such information. Nor do we construe section 222(a)
as negating a carrier's right under section 222(c)(1) to use, disclose
or permit access to CPNI for the specific purposes set forth in
subclauses (A) and (B).
352. We also disagree with the argument that our construction of
Section 222(a) enlists a ``vague or ancillary'' provision of the
statute to ``alter [its] fundamental details.'' Section 222(a) appears,
of course, at the beginning of Section 222. The first thirteen words of
Section 222(a)--and thus, of Section 222--read: ``Every
telecommunications carrier has a duty to protect the confidentiality of
proprietary information. . . .'' Congress could not have featured this
language any more prominently within the statute, nor could the duty it
propounds be any more clearly and directly expressed. As discussed
above, a statutory structure of establishing a general duty and then
addressing subsets of that duty in greater detail is not unique, even
within the Communications Act.
353. Finally, we reject the view that our interpretation of section
222(a) locates in ``a long-extant statute an unheralded power to
regulate a significant portion of the American economy.'' The
Commission has exercised regulatory authority under section 222(c) for
approximately two decades and oversaw certain carriers' handling of
customer PI for over two decades before that. Even assuming a contrary
reading of section 222(a), subsection (c) would still invest the
Commission with substantial regulatory authority over personal
information that BIAS providers and other telecommunications carriers
collect from their customers, and sections 201 and 202 would apply to
carriers' practices in handling customers' information. Thus, our
interpretation of section 222(a) is a far cry from the
``transformative'' act of statutory interpretation struck down in
Utility Air Regulatory Group v. EPA. There, the agency's broad
construction of the term ``air pollutant'' would have completely
upended the ``structure and design'' of a permitting scheme established
by statute and extended that regime to broad swaths of the economy. By
contrast, the net effect of our interpreting Section 222(a) as
governing all customer PI is to make clear the Commission's authority
over carriers' treatment of customer proprietary information that may
not qualify as CPNI, such as Social Security numbers or financial
records. This represents a modest but critical recognition of our
regulatory purview beyond CPNI to cover additional ``proprietary''
information that section 222(a) plainly reaches. Moreover, BIAS
providers' treatment of such information fell squarely within the
jurisdiction of the FTC prior to the Commission's reclassification of
BIAS. The scope of regulatory authority we are asserting under section
222(a) is thus far from novel or ``unheralded.''
b. The Broad Duty of Section 222(a) Extends to All ``Proprietary
Information'' That Is ``Of'' or ``Relating to'' Customers
354. Having determined that section 222(a) imposes on carriers an
enforceable duty, we also conclude that this duty extends to all
``proprietary information'' that is ``of, or relating to'' customers,
regardless of whether the information qualifies as CPNI. That is, we
reject the argument that section 222(c) exhausts the duty set forth in
section 222(a) as it applies with respect to customers.
355. Once again, our interpretation follows from the plain language
of section 222. While subsection (c) establishes obligations with
respect to ``customer proprietary network information,'' subsection (a)
omits the word ``network.'' The concept of the ``network'' lies at the
heart of CPNI: The information defined as CPNI in section 222(h)(1) is
of the sort that carriers obtain by virtue providing service over their
networks. However, as we have explained above, this sort of information
is not the only ``proprietary information'' that telecommunications
carriers can and do obtain from their customers by virtue of the
carrier-customer relationship. We therefore find that ``proprietary
information of, and relating to . . . customers'' is best read as
broader than CPNI. Moreover, we are convinced that the term ``network''
should not be read into section 222(a), contrary to what some
commenters appear to argue. We dismiss the idea that the syntax of
section 222(a) would have made it awkward to include the term
``network'' as an express limitation
[[Page 87326]]
on the general duty as it applies with regard to customer proprietary
information. Congress is not bound to any particular formula when
drafting legislation. Section 222(a) could easily have been written to
include the term ``customer proprietary network information'' in full,
had Congress chosen to do so. For instance, the subsection could have
read: ``Every telecommunications carrier has a duty to protect the
confidentiality of customer proprietary network information, and of
proprietary information of, and relating to, other telecommunication
carriers and equipment manufacturers, including telecommunication
carriers reselling telecommunications services provided by a
telecommunications carrier.''
356. Even if there were some ambiguity in the text of the statute,
we would conclude that the best interpretation is that section 222(a)
applies to customer proprietary information that is not CPNI. Some
argue that the legislative history of section 222 precludes this
interpretation because of a statement from the Conference Report that
attended passage of the 1996 Act, which reads: ``In general, section
222 strives to balance both competitive and consumer privacy interests
with respect to CPNI.'' Commenters appear to interpret this statement
as evidence that Section 222 was intended to apply only to CPNI. But
this is clearly not so. Section 222(a) concerns not only customer
information but also information ``of, and relating to'' fellow
carriers and equipment manufacturers. Section 222(b) in turn is focused
exclusively on ``carrier information.'' Furthermore, subsections (e)
and (g) impose affirmative obligations on carriers in certain
circumstances to share SLI, which by definition is not CPNI. Therefore,
section 222 in general cannot be concerned solely with CPNI. We are
similarly unmoved by evidence that Congress considered but ultimately
rejected a more expansive definition of CPNI than that which is
codified in section 222(h)(1). Such evidence cannot decide the question
whether section 222(a) governs a category of customer information that
is broader than CPNI. As explained above, our interpretation follows
from the plain language of the provision, and the legislative history
of Section 222 is not to the contrary. At the very least, any contrary
evidence that may be derived from the legislative history is far from
sufficient to override our reasoned interpretation of the provision.
357. We acknowledge that prior Commission orders implementing
section 222 have focused largely on CPNI rather than customer PI more
broadly. Yet we do not believe this precedent should constrain our
efforts in this proceeding to develop robust privacy protections for
consumers under section 222(a). In fact, the Commission made clear as
early as 2007 that section 222(a) requires carriers to ``take every
reasonable precaution to protect the confidentiality of proprietary or
personal customer information.'' Our express determination in the
TerraCom proceeding that subsection (a) covers customer proprietary
information beyond CPNI merely ``affirm[ed]'' what the Commission had
strongly implied seven years earlier. Moreover, earlier orders adopting
and revising rules under Section 222 were focused so narrowly on the
protection of individually identifiable CPNI that the question whether
Section 222(a) covers additional customer information was never
squarely addressed. This early focus on CPNI makes sense: Section 222
was adopted against the background of existing Commission regulations
concerning CPNI, and the first section 222 proceeding was instituted in
response to a petition from industry seeking clarity about the use of
CPNI. However, the Commission has never expressly endorsed the view
that section 222(a) fails to reach customer information beyond CPNI. We
expressly disavow any prior Commission statement that could be read as
endorsing such a view. We therefore disagree that interpreting the
provision in a contrary manner will have the effect of unsettling ``18
years'' of Commission precedent in this area.
358. Finally, construing section 222(a) as reaching customer
information other than CPNI avoids the creation of a regulatory gap
that Congress could not reasonably have intended. While the FTC has
broad statutory authority to protect against ``unfair or deceptive''
commercial practices, its enabling statute includes a provision that
exempts common carriers subject to the Communications Act. This leaves
the Federal Communications Commission as the only federal agency with
robust authority to regulate BIAS providers and other
telecommunications carriers in their treatment of sensitive customer
information obtained through the provision of BIAS and other
telecommunications services. If that authority failed to reach customer
PI other than CPNI, substantial quantities of highly sensitive
information that carriers routinely collect and use would fall outside
of the purview of either this Commission or the FTC. The facts of
TerraCom make clear the dangers of this outcome. In that proceeding we
enforced Section 222(a) against a carrier that neglected to take even
minimal security measures to protect Social Security numbers and other
sensitive customer data from exposure on the public Internet.
Commenters that advocate a narrow construction of section 222(a) would
have us divest ourselves of authority to take action in circumstances
such as these. We need not and will not leave consumers without the
authority to decide under what circumstances, if any, their BIAS
providers are allowed to use and share their Social Security numbers,
financial and health information, and other personal information.
c. The Rules We Adopt as to ``Customer PI'' Reasonably Implement the
Mandate of Section 222(a) That Carriers ``Protect the Confidentiality''
of Such Information
359. The rules we adopt in this Report and Order apply with respect
to customer PI, which we have defined to include three overlapping
categories of information: Individually identifiable CPNI; personally
identifiable information (PII); and the content of communications. As
explained above, the information we define as customer PI is
``proprietary information of, [or] relating to . . . customers'' for
purposes of section 222(a). The rules we adopt in this Report and Order
faithfully implement this statutory provision. As a general matter, we
are adopting a uniform regulatory scheme to govern all customer PI,
regardless of whether the information qualifies as CPNI. We have
achieved this unity by replicating the basic structure of section
222(c), including the exceptions set forth in section 222(d), under
section 222(a). In doing so, we uphold the specific statutory terms
that govern CPNI, while adapting these to the broader category of
customer PI. This approach is lawful under the statute and well-
supported as a matter of policy.
360. As discussed above, we understand section 222(a) to impose a
broad duty on carriers to protect customer PI that extends beyond the
narrower scope of information specified in section 222(c). Section
222(c) sets forth binding rules regarding application of the general
duty to carriers' handling of CPNI. In support of this view, we note
the common focus of these subsections on ``confidentiality.'' While
subsection (a) directs carriers to ``protect the confidentiality of
proprietary information'' in general, subsection (c) concerns the
confidentiality of ``individually
[[Page 87327]]
identifiable customer proprietary network information'' in particular.
Under our interpretation, subsection (c) provides one possible way of
implementing the broad duty set forth in subsection (a). That is,
subsection (c) settles what it means for a carrier to ``protect the
confidentiality of proprietary information'' when the information at
issue is individually identifiable CPNI. Given this reading of the two
provisions, we find no reason that the basic scheme set forth in
section 222(c) to govern individually identifiable CPNI cannot not be
replicated under section 222(a) to govern customer PI more broadly. In
adopting section 222(c), Congress identified a scheme for ``protecting
the confidentiality of proprietary information'' that it deemed valid
at least in the context of CPNI. The statute is silent on the
implementation of this general duty as it applies to customer PI more
broadly. In the absence of clear statutory guidance on the matter, we
must exercise our judgment to determine a regulatory scheme that is
appropriate for customer PI other than individually identifiable CPNI.
361. We have good reason to adopt a single set of rules for all
customer PI under section 222(a) that is based on the scheme set forth
for individually identifiable CPNI in sections 222(c) and (d). First,
the record indicates that customer expectations about the use and
handling of their personal information do not typically depend on
whether the information at issue is CPNI or some other kind of
proprietary information. Rather, customers are far more likely to
recognize distinctions based on the sensitivity of the data. The rules
we adopt today uphold this widespread customer expectation. In
addition, a common set of rules for all customer PI subject to 222(a)
will be easier for customers to understand and for providers to
implement than two distinct sets of rules. These considerations go to
the very heart of section 222: The ability of customers to make
informed decisions and of providers to apply a harmonized regime to all
customer data will each contribute to the protection of
``confidentiality'' that the statute requires. Moreover, equalizing
treatment of CPNI and other customer PI more closely aligns our rules
with the FTC's time-tested privacy approach.
362. We agree with Comcast that ``protect[ing] confidentiality'' of
proprietary information involves, among other things, ``preventing
[such information] from being exposed without authorization.'' This is
among the core purposes of our rules. The requirement to obtain
customer approval before using, disclosing, or permitting access to
customer PI directly ensures that such information is not ``expose[d]''
without the ``authorization'' of the customer. The notice requirement
advances this purpose further by providing customers the information
they need to make informed choices regarding such use, disclosure, and
access. As for the data security rule we adopt, its essential purpose
is to safeguard customer PI from inadvertent or malicious
``expos[ure].'' The data breach notification rule reinforces these
other requirements by providing customers, the Commission, and law
enforcement agencies with notice of instances in which customer PI was
``exposed without authorization.'' Finally, we uphold customers'
ability to make decisions about the ``expos[ure]'' of their data by
prohibiting carriers from conditioning service on the surrender of
privacy rights.
363. Yet ``protecting the confidentiality'' of customer PI involves
more than protecting it from unauthorized exposure. AT&T draws a false
distinction in arguing that certain aspects of the rules ``have nothing
to do with confidentiality concerns and instead address only the uses
of information within an ISP's possession.'' On the contrary, upholding
customer expectations and choices regarding the use of their
proprietary information is an integral part of ``protecting the
confidentiality of'' that information for purposes of section 222. In
support of this view, we note that restrictions on the use of
individually identifiable CPNI are part of the scheme enacted under
section 222(c) to address the ``confidentiality of [CPNI],'' and use is
the sole conduct regulated to address the ``confidentiality of carrier
information'' under subsection (b). We thus believe the most natural
reading of the term ``confidentiality'' as used in section 222 is that
it encompasses the use of information, not only ``disclos[ure]'' and
permissions of ``access.'' As a coalition of consumer advocacy groups
explain, in creating section 222 ``Congress most explicitly directed
the Commission to ensure that users are not merely protected from
exposure to third parties, but can actively control how the
telecommunications provider itself uses the information'' it collects.
We agree with Verizon that `` `protect' and `use' are different words
[that] must have different meanings'' within the statute, but our view
is that these meanings differ in terms of breadth. The ``protect[ion]
of confidentiality'' is a concept that is broad enough to cover the
different kinds of conduct regulated under section 222(c): Use,
disclosure, and permission of access. A carrier that uses, discloses,
or permits access to individually identifiable CPNI without customer
approval violates its duty under section 222(c) to protect the
``confidentiality'' of that CPNI. The same analysis applies under
section 222(a) with regard to customer PI more broadly. Accordingly, we
find section 222(a)'s duty to ``protect the confidentiality'' of
proprietary information supports our rules in full.
3. Section 222(c) Provides Authority for the Rules as to CPNI
364. In addition to our section 222(a) authority discussed above,
we have authority under section 222(c) to adopt the rules articulated
in this Order as to individually identifiable CPNI. Subsection (c)
obligates carriers to obtain customer approval for any use or
disclosure of individually identifiable CPNI, except to provide the
underlying telecommunications service or related services. Our rules
implement this mandate.
365. First, our rules establish three methods for obtaining the
customer approval required under section 222(c): Inferred consent, opt-
in and opt-out. There exists longstanding Commission precedent for
requiring the use of these methods, and commenters generally support
some combination of the three. Under the rules we adopt in this Order,
whether a carrier must seek an affirmative ``opt-in'' depends primarily
on whether the information at issue is sensitive. This distinction is
permissible under section 222(c), which requires customer approval in
general for most uses and disclosures of individually identifiable CPNI
but does not specify the form this approval must take in any particular
circumstance. Second, we require carriers to provide their customers
with notice of their privacy policies, both at the point of sale and
through posting on their Web sites and in mobile apps. This is an
essential part of customer approval, as only informed customers can
make meaningful decisions about whether and how extensively to permit
use or disclosure of their information. The need for this notice to be
given at the point of sale is particularly acute in circumstances where
approval may take the form of an ``opt-out.'' In such cases, the notice
itself is integral to the ``approval'': customers are presumed to
approve of the use or disclosure unless and until they affirmatively
``opt out'' of such activity. We also prohibit carriers from
[[Page 87328]]
conditioning the provision of service on consent to the use or
disclosure of information protected under section 222. We believe that
this prohibition is necessary to give effect to the customer approval
that subsection (c) requires.
366. We next require carriers to take reasonable measures to secure
the individually identifiable CPNI they collect, possess, use and
share. Such a requirement is necessary to uphold customer decisions
regarding use and disclosure of their information and to give effect to
the terms of carriers' privacy policies. These other privacy
protections would be vitiated if customers lacked any assurance that
their information would be secured against unauthorized or inadvertent
disclosures, cyber incidents, or other threats to the confidentiality
of the information. Finally, we require carriers to report data
breaches to their customers, the Commission, and law enforcement,
except when a carrier reasonably determines that there is no reasonable
likelihood of harm to customers. The Commission has long required such
reporting as part of a carrier's duty to protect the confidentiality of
its customers' information. Among other purposes, data breach
notifications can meaningfully inform customer decisions regarding
whether to give, withhold, or retract their approval to use or disclose
their information.
367. In adopting these rules, we are respectful of other parts of
the statute that limit or condition the scope of section 222(c). For
instance, our rules preserve the statutory distinction between
individually identifiable ``CPNI'' and ``aggregate customer
information.'' As explained above, we have not modified the definition
of either of these terms in a way that would impermissibly narrow the
scope of section 222(c)(3). In addition, our rules include provisions
that implement the exceptions to Section 222(c) that are set forth in
section 222(d). Finally, our rules are consistent with and pose no
obstacle to compliance with the requirements of sections 222(e) and (g)
that subscriber information be disclosed in certain defined
circumstances.
B. Sections 201(b) and 202(a) Provide Additional Authority To Protect
Against Privacy Practices That Are ``Unjust or Unreasonable'' or
``Unjustly or Unreasonably Discriminatory''
368. While section 222 provides sufficient authority for the
entirety of the rules we adopt in this Order, we conclude that sections
201(b) and 202(a) also independently support the rules, because they
authorize the Commission to prescribe rules to implement carriers'
statutory duties not to engage in conduct that is ``unjust or
unreasonable'' or ``unjustly or unreasonably discriminatory.'' Our
enforcement of sections 201(b) and 202(a) in the context of BIAS finds
expression in the ``no unreasonable interference/disadvantage''
standard adopted in the 2015 Open Internet Order. As we explained in
the 2015 Open Internet Order, ``practices that fail to protect the
confidentiality of end users' proprietary information'' are among the
potential carrier practices that are ``unlawful if they unreasonably
interfere with or disadvantage end-user consumers' ability to select,
access, or use broadband services, applications, or content.'' Above,
we noted that financial incentives to surrender privacy rights in
connection with BIAS are one sort of practice that could potentially
run afoul of this standard, and we will accordingly monitor such
practices closely. Yet, aside from prohibiting ``take-it-or-leave-it''
offerings, we do not engage in any ex ante prohibition of such
practices.
369. In addition, sections 201(b) and 202(a) provide backstop
authority to ensure that no gaps are formed in Congress's multi-statute
regulatory framework governing commercial privacy and data security
practices. As explained above, the FTC's enabling statute grants the
agency broad authority with respect to such practices, but denies it
authority over common carrier activities of common carriers. That
leaves this Commission as the sole federal agency with authority to
regulate telecommunications carriers' treatment of personal and
proprietary customer data obtained in the provision of BIAS and other
telecommunications services. While we believe section 222 endows the
Commission with ample authority for the rules we adopt today to protect
such data, both as to CPNI and other customer PI, sections 201(b) and
202(a) provide an independent legal basis for the rules. Indeed, both
this Commission and the FTC have long recognized that similar conduct
would tend to run afoul of section 201(b) and of Section 5 of the FTC
Act, the statutory linchpin of the FTC's privacy and data security
enforcement work. Thus, asserting sections 201(b) and 202(a) as a basis
for our rules merely preserves consistent treatment of companies that
collect sensitive customer information--including Social Security
numbers and financial records--regardless of whether the company
operates under the FCC's or FTC's authority.
370. Accordingly, for these reasons and others discussed throughout
this Report and Order, we find that Sections 201(b) and 202(a) by their
own terms, consistent the 2015 Open Internet Order's interpretation of
those provisions in the context of BIAS, provide authority for the
adoption of these rules. Also, while we recognize that
telecommunications services other than BIAS are beyond the reach of the
open Internet rules, providers of such services remain subject to
enforcement directly under sections 201(b) and 202(a), and those
provisions authorize adoption of these rules.
C. Title III of the Communications Act Provides Independent Authority
371. With respect to mobile BIAS and other mobile
telecommunications services, the rules we adopt in this Order are also
independently supported by our authority under Title III of the Act to
protect the public interest through spectrum licensing. Section 303(b)
directs the Commission, consistent with the public interest, to
``[p]rescribe the nature of the service to be rendered by each class of
licensed stations and each station within any class.'' These rules do
so. They lay down rules about ``the nature of the service to be
rendered'' by licensed entities providing mobile telecommunications
service; making clear that this service may not be offered in ways that
harm the interests of consumers is protecting the confidentiality of
their personal information. Today's rules specify the form this service
must take for those who offer it pursuant to license. In providing such
licensed service, carriers must adhere to the rules we adopt today.
Section 303(r) also supplements the Commission's authority to carry out
its mandates through rulemaking, and section 316 authorizes the
Commission to adopt new conditions on existing licenses if it
determines that such action ``will promote the public interest,
convenience, and necessity.'' Throughout this Order, we determine that
the rules adopted here will promote the public interest.
D. The Rules Are Also Consistent With the Purposes of Section 706 of
the 1996 Act
372. We also believe that our rules are consistent with section 706
of the 1996 Act and will help advance its objective of promoting ``the
deployment on a reasonable and timely basis of advanced
telecommunications capability to all Americans.'' We agree with
commenters that strong broadband privacy and data security practices
tend to promote consumer trust and confidence, which can increase
demand for broadband and
[[Page 87329]]
ultimately spur additional facilities deployment. Moreover, we have
adopted a flexible set of rules that are largely consistent with the
FTC's approach to privacy regulation, creating a measure of consistency
across the telecommunications ecosystem. We thus reject any argument
that the rules will impose novel costs or burdens on BIAS providers and
other telecommunications carriers that would discourage further
deployment of advanced services.
E. We Have Authority To Apply the Rules to Interconnected VoIP Services
373. In 2007, the Commission exercised ancillary jurisdiction to
extend its Part 64 CPNI rules to interconnected VoIP services. Since
then, interconnected VoIP providers have operated under these rules.
Today, we exercise the same authority to apply to interconnected VoIP
services the harmonized set of rules we are adopting for BIAS and other
telecommunications services. We make no decisions in this Order on the
regulatory classification of interconnected VoIP services.
Interconnected VoIP services remain within the Commission's subject
matter jurisdiction, and we continue to find that the application of
customer privacy requirements to these services is ``reasonably
ancillary to the effective performance'' of our statutory
responsibilities. We conclude that our jurisdiction to apply the rules
in this Order to interconnected VoIP providers is just as strong as it
was in 2007. In addition to the analysis in the 2007 CPNI Order, we
observe that applying these obligations to interconnected VoIP
providers is necessary to protect the privacy of customers of BIAS
providers and other telecommunications services. Given the growth in
interconnected VoIP and the extent to which it increasingly is viewed
as a substitute for traditional telephone service, telecommunications
carriers could be disadvantaged if they were subject to these
requirements but other interconnected VoIP providers were not.
Consumers' privacy interests could benefit to the extent that providers
of competitive services are subject to the same obligations.
Furthermore, in light of Congress's amendment of the Act, including
section 222, to apply E-911 obligations to interconnected VoIP, the 911
system could be disrupted to the extent that our harmonized section 222
regime were no longer to apply to interconnected VoIP. As the
Commission explained in 2007, ``American consumers [can reasonably]
expect that their telephone calls are private irrespective of whether
the call is made using the service of a wireline carrier, a wireless
carrier, or an interconnected VoIP provider.'' Furthermore, ``extending
section 222's protections to interconnected VoIP service customers is
necessary to protect the privacy of wireline or wireless customers that
place calls to or receive calls from interconnected VoIP providers.''
These rationales hold equally true today. In addition, in 2008,
Congress ratified the Commission's decision to apply section 222's
requirements to interconnected VoIP by adding language to section 222
that expressly covers ``IP-enabled voice service,'' defined expressly
to incorporate the Commission's definition of ``interconnected VoIP
service.''
374. We believe that the rules we adopt today are no less suitable
for interconnected VoIP service, and are in fact better tailored to
that service, than the rules adopted in 2007. As explained above, we
have adopted a harmonized set of rules for voice services and BIAS.
There is considerable flexibility built into these rules to permit
providers of different services and with different business models to
adopt privacy practices appropriate for their businesses. Moreover,
while the Order expands on existing obligations in some respects, it
also streamlines or removes several of the more prescriptive
requirements codified in the existing rules. We have also broadened the
enterprise customer exemption and taken measures to address the
potential for disproportionate impacts on smaller providers, including
those that provide interconnected VoIP service. We therefore are not
persuaded that our rules will overburden interconnected VoIP providers
in particular with ``expand[ed] privacy obligations'' that would
``forestall competition.''
F. Constitutional Considerations
1. Our Sensitivity-Based Choice Framework Is Supported by the
Constitution
375. In adopting section 222, Congress identified a substantial
government interest in protecting the privacy of customers of
telecommunications services. In adopting and revising rules pursuant to
section 222 we have recognized and honored that same substantial
interest. Nonetheless, because our rules require carries to provide
their customers with tools to grant or deny the carriers approval to
use customer information for marketing and other purposes, they can be
said to restrict certain types of commercial speech by
telecommunications carriers, and therefore must be narrowly tailored to
further that substantial government interest. In the Central Hudson
case, the Supreme Court found that in order to meet the requirement
that rules implicating commercial speech are narrowly tailored to meet
a substantial government interest, the government must conduct a
threshold inquiry regarding whether the commercial speech concerns
lawful activity and is not misleading. If this threshold requirement is
met, as it is here, the government may restrict the speech only if (1)
the government interest advanced by the regulation is substantial; (2)
the regulation directly and materially advances that interest; and (3)
the regulation is not more extensive than necessary to serve the
interest. By adopting a sensitivity-based framework for giving
customers tools to make decisions about their telecommunications
carriers' use and sharing of their information, the rules we adopt
today meet that three part test.
a. Substantial Government Interest
376. We agree with the D.C. Circuit that section 222 seeks to
promote a substantial public interest in protecting consumer privacy.
The record indicates broad agreement on this point, which is further
reinforced by the wealth of case law reiterating the substantial state
interest in protecting privacy. Section 222 is designed to protect the
interest of telecommunications consumers in limiting unexpected and
unwanted use and disclosure of their personal information by carriers
that must collect such information in order to provide the
telecommunications service, and the record further indicates that
customers' ability to know and control the information gathered by
virtue of their relationships with their telecommunications providers
also comprises a substantial government interest.
377. The failure to adequately protect customer PI can have myriad
negative consequences for customers and society at large. Revelations
of private facts have been recognized as harms since at least the time
of Justices Warren and Brandeis. Failure to protect the privacy of
consumer information can, of course create a risk of financial harm,
identity theft and physical threat. The Commission has also found that
emotional and dignitary harms are privacy harms, in other contexts. In
implementing the Truth in Caller ID Act, the Commission found that
``harm'' was a broad concept encompassing financial, physical, and
emotional harm. The FTC similarly recognized that harms beyond the
economic, physical, and intrusive are nonetheless real and cognizable,
and the Administration's
[[Page 87330]]
CPBR defines ``privacy risk'' to include the potential to cause
``emotional distress, or physical, financial, professional, or other
harm to an individual.''
378. Some commenters argue that the Commission can only demonstrate
an interest in addressing the disclosure of customer PI and not in how
carriers' use customer PI. We disagree. The Supreme Court has
recognized that an important part of privacy is the right to know and
have an effective voice in how one's information is being used, holding
that ``both the common law and the literal understandings of privacy
encompass the individual's control of information concerning his or her
person.'' The D.C. Circuit has similarly held that ``it is widely
accepted that privacy deals with determining for oneself when, how, and
to whom personal information will be disclosed to others.'' This
conception of privacy is embedded within the history of the Fair
Information Practice Principles (which form the broadly-supported basis
for our privacy rules), and within the long history of communications
privacy as well. From their inception, FIPPs have recognized privacy as
an individual's right to control uses of information about him--not
merely to control their disclosures. The Federal Radio Act of 1927, and
the original language of the Communications Act of 1934, prohibited
carriers not only from publishing or divulging information relevant to
communications, but also from making uses of the information solely to
benefit themselves. Scholarly literature on privacy also finds that
misuse by the collecting entity can harm individuals' privacy, even
apart from disclosure.
379. Direct surveys confirm consumers' recognition of these harms.
According to the 2016 Consumer Privacy Index by TRUSTe and the National
Cybersecurity Alliance, 68 percent of consumers were more concerned
about not knowing how personal information was collected online than
losing their principal income. The Consumer Privacy Index also
indicated that large numbers of consumers want control over who has
access to personal information (45 percent), how that information is
used (42 percent), and the type of information collected (41 percent).
Consumers also object to their data being used, and not only disclosed,
in the service of targeted advertising. These studies demonstrate
empirically that consumers find loss of control over their information
harmful, even apart from potential monetary loss.
380. The risk of privacy harms directly affects behavior and
activity by eroding trust in and use of communications networks. As the
Commission has found, if ``consumers have concerns about the privacy of
their personal information, such concerns may restrain them from making
full use of broadband Internet access services and the Internet,
thereby lowering the likelihood of broadband adoption and decreasing
consumer demand.'' There is evidence that unexpected uses of private
customer information can increase fear, uncertainty, powerlessness, and
vulnerability. This is not a purely academic concern; the National
Telecommunications and Information Administration (NTIA) recently found
that fear of privacy violations chills online activity, to the point
where privacy concerns prevented 45 percent of online households from
conducting financial transactions, buying goods or services, or posting
on social networks. The Consumer Privacy Index found that 74 percent of
respondents limited their activity in the past year due to privacy
concerns, including 36 percent who stopped using certain Web sites and
29 percent stopped using an app. In contrast, when companies protect
consumers' privacy, consumers' adoption of their products, services,
and technologies increases.
381. We therefore conclude that the government's interest in
protecting customer privacy is a substantial one--a fact recognized
widely by consumers, the courts, and the Communications Act.
b. Direct and Material Advancement
382. The choice framework that we adopt directly and materially
advances the substantial government interests discussed above. We find
that requiring customer approval for use and disclosure of customer PI
prevents information uniquely collected and collated by
telecommunications carriers from being used or disclosed against a
customer's wishes, consistent with customer expectations, and as such
directly and materially advances the government's substantial
government interest in protecting customers' privacy. While we
recognize that adopting these rules cannot protect customers from
privacy violations that originate from entities that are not
telecommunications providers, the fact that the rules do not create
universal privacy protection does not mean that customers' privacy
interests are not advanced. Customers have an important interest in
ensuring that their personal information is not used by their BIAS
providers or other telecommunications carrier without their prior
approval in a way that the customers do not or cannot reasonably
expect.
383. In addition, requiring telecommunications carriers to obtain
opt-in approval for the use and sharing of sensitive customer PI
materially advances the government's interest in protecting
telecommunications customers' privacy and in enabling customer to avoid
unwanted and unexpected use and disclosure of sensitive customer PI.
The opt-in requirements we adopt today provide telecommunications
customers control over how their sensitive customer PI can be used for
purposes besides those essential to the delivery of service. Likewise,
we conclude that opt-out directly and materially advances the
government's interest that a customer be given an opportunity to
approve (or disapprove) uses of his non-sensitive customer PI by
mandating that carriers provide prior notice to customers along with an
opportunity to decline the carriers' requested use.
c. The Rules Are No More Burdensome Than Necessary To Advance the
Government's Substantial Interest
384. Central Hudson requires that regulations on commercial speech
be no more extensive than necessary to advance the substantial
interest. This does not mean that a regulation must be as narrow as
possible, however. The Supreme Court has held that ``[t]he government
is not required to employ the least restrictive means conceivable . . .
a fit that is not necessarily perfect, but reasonable; that represents
not necessarily the single best disposition but one whose scope is in
proportion to the interest served.'' As explained below, our framework
satisfies this test.
385. Non-Sensitive Customer PI. In most cases involving what we
categorize as non-sensitive customer PI, we find opt-in approval
unnecessary to ensure adequate customer choice. We therefore find that
the opt-out framework for use and sharing of non-sensitive customer PI
is a narrowly tailored means to directly and materially advance the
government's interest in protecting consumers from unapproved use of
non-sensitive customer PI by telecommunications carriers. The record
reflects that non-sensitive information naturally generates fewer
privacy concerns for customers, and as such does not require the same
level of customer approval as for sensitive customer PI. Further, the
record reflects that customers expect their providers to use their non-
sensitive information to market improved services, lower-priced service
offerings, promotional discounts for new services, and other offers of
[[Page 87331]]
value from telecommunications carriers and their affiliates. The record
also demonstrates that customers can reap significant benefits in the
form of more personalized service offerings and possible cost saving
from their carriers providing services based on the non-sensitive
customer PI that carriers collect. The Commission has previously found,
in the context of its voice CPNI rules, that ``telecommunications
consumers expect to receive targeted notices from their carriers about
innovative telecommunications offerings that may bundle desired
telecommunications services and/or products, save the consumer money,
and provide other consumer benefits.'' Requiring carriers to obtain
opt-out consent from customers to use and share their non-sensitive
information grants carriers flexibility to make improvements and
innovations based on customer PI, while still ensuring that customers
can control the use and sharing of their non-sensitive customer PI.
386. Sensitive Customer PI. We require opt-in approval only for the
most important information to customers--sensitive customer PI. We find
that requiring opt-in approval for the use and sharing of sensitive
customer PI is a narrowly-tailored means of advancing the Commission's
interests in protecting the privacy of sensitive customer PI, and in
enabling customers meaningful choice on the use and sharing of such
sensitive customer PI. As discussed above in detail, the record
reflects that customers reasonably expect that their sensitive
information will not be shared without their affirmative consent.
Furthermore, it has been our experience implementing section 222 that
sensitive information, being more likely to lead to more serious
customer harm, requires additional protection, and the record here
supports that view . Commenters nearly unanimously argue that use and
sharing of sensitive customer information be subject to customer opt-in
approval. Although we recognize that opt-in imposes additional costs,
we find that opt-in is warranted to maximize opportunities for informed
choice about sensitive information.
387. In contrast, we find that opt-out consent would be
insufficient to protect the privacy of sensitive customer PI. As a
functional matter, while opt-out consent has been described as the
least restrictive form of obtaining customer approval, it is only
``marginally less intrusive than opt-in for First Amendment purposes.''
As we explain above, research has shown that default choices can be
``sticky,'' meaning that consumers will remain in the default position,
even if they would not have actively chosen it. From this, we conclude
that an opt-out regime for use and sharing of sensitive customer PI
would not materially and directly advance the government's interest in
protecting customer privacy because it would not adequately address
customers' expectations that their sensitive customer PI is not used
without their affirmative consent.
2. Other First Amendment Arguments
388. Strict Scrutiny Under Sorrell. The customer choice rules we
adopt today do not impermissibly target particular speech or speakers,
and thus a strict scrutiny analysis under Sorrell v. IMS Health Inc. is
unwarranted. In Sorrell, the state of Vermont specifically targeted
``drug detailers'' and their marketing speech, which the state
disfavored, in a framework that otherwise permitted communications
about medical prescriptions. By contrast, the rules adopted here do not
disfavor any particular activity. While a large number of commenters
are particularly concerned with the limitations that the rules may
place upon marketing, customers' privacy interests reach far beyond
targeted marketing, to include for instance risk of identity theft or
other fraud, stalking, and revelations of private communications, as
well as the harms inherent in lacking control over the uses of their
proprietary information.
389. The fact that section 222 and our rules thereunder apply to
certain types of information and certain providers is a function of
their tailoring, not indications that they are content-based. As
explained above, our rules are tailored to address unique
characteristics of telecommunications services and of the relationship
between telecommunications carriers and their customers. Were we to
interpret Sorrell to hold sector-specific privacy laws such as section
222 and our rules to be content-based simply because they do not apply
to all entities equally, it would stand to invalidate nearly every
federal privacy law, considering the sectoral nature of our federal
privacy statutes. Indeed, if laws impacting expression were considered
content-based for not being universal, nearly every privacy and
intellectual property law would need to pass strict scrutiny. However,
Sorrell stands for no such thing, itself citing HIPAA--limited to
covering certain specific entities and types of information--as an
example of a constitutionally sound privacy protection. Similarly, use-
based exceptions to section 222 and our rules do not render the statute
or rules content-based any more than purpose-based exceptions in HIPAA.
390. Compelled Speech. Some commenters argue that the notice
requirements unconstitutionally compel speech from carriers. We
disagree. Requirements to include purely factual and uncontroversial
information in commercial speech are constitutional so long as they are
reasonably related to the government's substantial interest in
protecting consumers. The notice requirements we adopt here, just like
the notice requirements in the CPNI rules before them and like numerous
notice and labeling requirements before, require only that companies
provide factual and uncontroversial information to consumers.
391. Constitutional Avoidance. Some commenters raise arguments
citing the canon of constitutional avoidance. We do not believe this is
applicable. Constitutional avoidance is a canon of statutory
interpretation that states that a court should not resolve a case ``by
deciding a constitutional question if it can be resolved in some other
fashion.'' As the Supreme Court has held, ``[t]he so-called canon of
constitutional avoidance is an interpretive tool, counseling that
ambiguous statutory language be construed to avoid serious
constitutional doubts.'' The Court further found ``no precedent for
applying it to limit the scope of authorized executive action.'' The
canon of constitutional avoidance therefore does not apply to this
proceeding, does not require that we adopt an opt-out framework, and
does not mandate that we avoid regulating in this space.
392. Finally, to the extent that parties argue that today's rules
deny carriers a First Amendment right of editorial control or impose
prior restraints that implicate the First Amendment, we note that it is
well established that common carriers transmitting speech through
communications networks are not speakers for First Amendment purposes.
G. Severability
393. In this Report and Order, we adopt a unified scheme of privacy
protections for customers of BIAS and other telecommunications
services. While the unity and comprehensiveness of this scheme
maximizes its utility, we clarify that its constituent elements each
operate independently to protect consumers. Were any element of this
scheme stayed or invalidated by a reviewing court, the elements that
remained in effect would continue to provide vital consumer
protections. For instance, telecommunications customers have long
benefitted from Commission
[[Page 87332]]
rules governing the treatment CPNI. The rules we adopt today would
continue to ensure that such information is protected even if they did
not extend to all of the information we define as customer PI.
Similarly, the different forms of conduct regulated under section 222--
use, disclosure, and permission of access--each pose distinct threats
to the confidentiality of customer PI. Finally, the benefit of the
rules for customers of any particular telecommunications service does
not hinge on the same rules applying to other telecommunications
services. Accordingly, we consider each of the rules adopted in this
Report and Order to be severable, both internally and from the
remaining rules. In the event of a stay or invalidation of any part of
any rule, or of any rule as it applies as to certain services,
providers, forms of conduct, or categories of information, the
Commission's intent is to otherwise preserve the rule to the fullest
possible extent.
V. Procedural Matters
A. Regulatory Flexibility Analysis
394. As required by the Regulatory Flexibility Act of 1980 (RFA),
an Initial Regulatory Flexibility Analysis (IRFA) was incorporated into
the Broadband Privacy NPRM. The Commission sought written public
comment on the possible significant economic impact on small entities
regarding the proposals address in the 2016 Broadband Privacy NPRM,
including comments on the IRFA. Pursuant to the RFA, a Final Regulatory
Flexibility Analysis is set forth in Appendix B.
B. Paperwork Reduction Act
395. This document contains new information collection requirements
subject to the Paperwork Reduction Act of 1995 (PRA), Public Law 104-
13. It will be submitted to the Office of Management and Budget (OMB)
for review under Section 3507(d) of the PRA. OMB, the general public,
and other federal agencies are invited to comment on the new
information collection requirements contained in this proceeding. In
addition, we note that pursuant to the Small Business Paperwork Relief
Act of 2002, Public Law 107-198, see 44 U.S.C. 3506(c)(4), we
previously sought specific comment on how the Commission might further
reduce the information collection burden for small business concerns
with fewer than 25 employees.
396. In this present document, we require telecommunications
carriers to: (1) Disclose their privacy practices to customers; (2)
provide customers a mechanism for opting in or out of the use or
sharing of their customer PI; (3) notify customers of any unauthorized
disclosure or use of their customer PI; and (4) provide customers clear
and conspicuous notice regarding any financial incentive programs
related to the use or disclosure of their customer PI. We have assessed
the effects of these changes and find that the burdens on small
businesses will be addressed through the implementation plan adopted in
this Order, as well as accommodations made in response to small
carriers concerns on the record. The privacy policy notice rules, for
example, afford carriers significant flexibility on how to comply with
the notice requirement. They mandate neither a specific format nor
specific content to be contained in the notice. We have also directed
the Commission's Consumer Advisory Committee to develop a standardized
notice format that will serve as a safe harbor once adopted. Similarly,
the choice rules do not prescribe a specific format for accepting a
customer's privacy choices. The choice rules are also significantly
harmonized with existing rules, with which most small providers
currently comply. Additionally, the heightened requirements for
financial incentive programs allow all providers considerable latitude
to develop their programs within the parameters of the rule. Finally,
the data breach notification rules incorporate both a harm trigger and
notification timeline that significantly lessen the implementation
requirements for small providers.
C. Congressional Review Act
397. The Commission will send a copy of this Report and Order in a
report to be sent to Congress and the Government Accountability Office
pursuant to the Congressional Review Act (CRA), see 5 U.S.C.
801(a)(1)(A).
D. Accessible Formats
398. To request materials in accessible formats for people with
disabilities (braille, large print, electronic files, audio format),
send an email to fcc.gov">fcc504@fcc.gov or call the Consumer & Governmental
Affairs Bureau at 202-418-0530 (voice), 202-418-0432 (tty).
VI. Final Regulatory Flexibility Analysis
399. As required by the Regulatory Flexibility Act of 1980, as
amended (RFA), an Initial Regulatory Flexibility Analysis (IRFA) was
incorporated into the Broadband Privacy NPRM for this proceeding. The
Commission sought written public comment on the proposals in the
Broadband Privacy NPRM, including comment on the IRFA. The Commission
received comments on the IRFA, which are discussed below. This present
Final Regulatory Flexibility Analysis (FRFA) conforms to the RFA.
A. Need for, and Objectives of, the Rules
400. In the Order, we adopt privacy requirements for providers of
broadband Internet access service (BIAS) and other telecommunications
services. In doing so, we build upon the Commission's long history of
protecting customer privacy in the telecommunications sector. Section
222 of the Communications Act provides statutory protections to the
privacy of the data that all telecommunications carriers collect from
their customers. Section 222(a) imposes a duty on all
telecommunications carriers to protect the confidentiality of their
customers' ``proprietary information,'' or PI. Section 222(c) imposes
restrictions on telecommunications carriers' use and sharing of
customer proprietary network information (CPNI) without customer
approval, subject to certain exceptions, including as necessary to
provide the telecommunications service (or services necessary to or
used in providing that telecommunications service), and as required by
law.
401. Over the last two decades, the Commission has promulgated,
revised, and enforced privacy rules for telecommunications carriers
that are focused on implementing the CPNI requirements of section 222.
As practices have changed, the Commission has refined its section 222
rules. The current section 222 rules focus on transparency, choice,
data security, and data breach notification.
402. Prior to 2015, BIAS was classified as an information service,
which excluded such services from the ambit of Title II of the Act,
including section 222, and the Commission's CPNI rules. Instead,
broadband providers were subject to the FTC's unfair and deceptive acts
and practices authority. In the 2015 Open Internet Order, we
reclassified BIAS as a telecommunications service subject to Title II
of the Act, an action upheld by the D.C. Circuit in United States
Telecom Ass'n v. FCC. While we granted BIAS forbearance from many Title
II provisions, we concluded that application and enforcement of the
privacy protections in section 222 to BIAS is in the public interest
and necessary for the protection of consumers. However, we questioned
``whether the Commission's current rules implementing section 222
necessarily would be well suited to
[[Page 87333]]
broadband Internet access service,'' and forbore from the application
of these rules to broadband service, ``pending the adoption of rules to
govern broadband Internet access service in a separate rulemaking
proceeding.''
403. In March 2016, we adopted the Broadband Privacy NPRM, which
proposed a framework for applying the longstanding privacy requirements
of the Act to BIAS. In the NPRM, we proposed rules protecting customer
privacy using the three foundations of privacy--transparency, choice,
and security--and also sought comment on, among other things, whether
we should update rules that govern the application of section 222 to
traditional telephone service and interconnected VoIP service in order
to harmonize them with the results of this proceeding.
404. Based on the record gathered in this proceeding, today we
adopt a harmonized set of rules applicable to BIAS providers and other
telecommunications carriers. The privacy framework we adopt focuses on
transparency, choice, and data security, and provides heighted
protection for sensitive customer information, consistent with customer
expectations. Our need to extend such privacy requirements to BIAS
providers is based, in part, on their particular role as network
providers and the context of the consumer/BIAS provider relationship.
Based on our review of the record, we reaffirm our earlier finding that
a broadband provider ``sits at a privileged place in the network, the
bottleneck between the customer and the rest of the Internet''--a
position that we have referred to as a gatekeeper. As such, BIAS
providers can collect ``an unprecedented breadth'' of electronic
personal information.
405. In adopting these rules we honor customers' privacy rights and
implement the statutory requirement that carriers protect the
confidentiality of customer proprietary information. These rules do not
prohibit carriers from using or sharing customer information, but
rather are designed to protect consumer choice while giving carriers
the flexibility they need to continue to innovate. By bolstering
customer confidence in carriers' treatment of confidential customer
information, we also promote the virtuous cycle of innovation in which
new uses of the network lead to increased end-user demand for
broadband, which drives network improvements, which in turn lead to
further innovative network uses, business growth and innovation.
B. Summary of Significant Issues Raised by Public Comments in Response
to the IRFA
406. In response to the Broadband Privacy NPRM, five entities filed
comments, reply comments, and/or ex parte letters that specifically
addressed the IRFA to some degree: Alaska Telephone Association,
Competitive Carriers Association, NTCA, Rural Wireless Association, and
Wireless Internet Service Providers Association (WISPA). Some of these,
as well as other entities, filed comments, reply comments, and/or ex
parte letters that more generally considered the small business impact
of our proposals.
407. Some commenters recommend that the Commission adopt specific
exemptions or provisions to alleviate burdens on small carriers. In
particular, commenters recommend that the Commission (1) exempt small
carriers from some or all of the rules based on their size and/or
practices; (2) give small carriers additional time to comply with the
rules; (3) harmonize notice and choice requirements with the
preexisting voice CPNI rules; (4) exempt small carriers from any
privacy dashboard requirements and otherwise give them flexibility in
the structure of their privacy notices; (5) grandfather existing
customer approvals for use and disclosure of customer information; (6)
exempt small carriers from any opt-in approval requirements; (6) not
impose specific data security requirements on small providers; (7) not
impose specific data breach reporting deadlines on small providers, and
instead allow them to report breaches as soon as practicable; and (8)
not hold small carriers liable for misuse of customer PI by third
parties with whom they share the information. We considered these
proposals and concerns when composing the Order and the accompanying
rules.
C. Response to Comments by the Chief Counsel for Advocacy of the Small
Business Administration
408. Pursuant to the Small Business Jobs Act of 2010, which amended
the RFA, the Commission is required to respond to any comments filed by
the Chief Counsel for Advocacy of the Small Business Administration
(SBA), and to provide a detailed statement of any change made to the
proposed rules as a result of those comments.
409. The SBA filed comments in response to the IRFA encouraging the
Commission to examine measures, exemptions, and alternatives that would
ease compliance by small telecommunications carriers with our rules.
SBA observed that compliance costs to small providers may include
``consulting fees, attorney's fees, hiring or training in-house privacy
personnel, customer notification costs, and opportunity costs.'' In
particular, SBA recommends giving small providers more time to comply
with the rules and it supports granting small providers an exemption
from the rules ``wherever practicable.''
410. As explained in detail below, we have taken numerous measures
in this Order to alleviate burdens for small providers, consistent with
the comments of the SBA. In particular, we have adopted SBA's proposal
that we give small providers additional time to comply. Also, while we
do not exempt small providers from any of our rules, we have taken
alternative measures to address several of the concerns with specific
rule proposals that the SBA identifies. For instance, the data security
rule we adopt focuses on the ``reasonableness'' of a carrier's security
practices and does not prescribe any minimum required practices a
provider must undertake to achieve compliance. The rule also
specifically recognizes that the size of the provider is one of the
factors to be considered in determining whether a provider has engaged
in reasonable data security practices. By formulating the rule in this
way, we have addressed small provider concerns regarding the costs of
implementing prescriptive requirements. We also note that among other
accommodations directly responsive to small provider concerns, we
decline to require a consumer-facing dashboard.
D. Description and Estimate of the Number of Small Entities to Which
the Rules Will Apply
411. The RFA directs agencies to provide a description of, and
where feasible, an estimate of the number of small entities that may be
affected by the rules. The RFA generally defines the term ``small
entity'' as having the same meaning as the terms ``small business,''
``small organization,'' and ``small governmental jurisdiction.'' In
addition, the term ``small business'' has the same meaning as the term
``small business concern'' under the Small Business Act. A ``small
business concern'' is one which: (1) is independently owned and
operated; (2) is not dominant in its field of operation; and (3)
satisfies any additional criteria established by the SBA.
412. For the purposes of these rules, we define small providers as
providers with 100,000 or fewer broadband connections as reported on
their most recent Form 477, aggregated over all the
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providers' affiliates. We decline to count based on the number of
customers from whom carriers collect data, as we recognize that some
data collection is necessary to the provisions of service. Cabining the
scope of small providers to those serving 100,000 or fewer subscribers
is consistent with the 2015 Open Internet Order.
413. The rules apply to all telecommunications carriers, including
providers of BIAS. Below, we describe the types of small entities that
might provide these services.
1. Total Small Entities
414. Our rules may, over time, affect small entities that are not
easily categorized at present. We therefore describe here, at the
outset, three comprehensive, statutory small entity size standards.
First, as of 2013, the SBA estimates there are an estimated 28.8
million small businesses nationwide--comprising some 99.9% of all
businesses. In addition, a ``small organization'' is generally ``any
not-for-profit enterprise which is independently owned and operated and
is not dominant in its field.'' Nationwide, as of 2007, there were
approximately 1,621,315 small organizations. Finally, the term ``small
governmental jurisdiction'' is defined generally as ``governments of
cities, towns, townships, villages, school districts, or special
districts, with a population of less than fifty thousand.'' Census
Bureau data for 2011 indicate that there were 90,056 local governmental
jurisdictions in the United States. We estimate that, of this total, as
many as 89,327 entities may qualify as ``small governmental
jurisdictions.'' Thus, we estimate that most governmental jurisdictions
are small.
2. Broadband Internet Access Service Providers
415. The Economic Census places BIAS providers, whose services
might include Voice over Internet Protocol (VoIP), in either of two
categories, depending on whether the service is provided over the
provider's own telecommunications facilities (e.g., cable and DSL
ISPs), or over client-supplied telecommunications connections (e.g.,
dial-up ISPs). The former are within the category of Wired
Telecommunications Carriers, which has an SBA small business size
standard of 1,500 or fewer employees. These are also labeled
``broadband.'' The latter are within the category of All Other
Telecommunications, which has a size standard of annual receipts of
$32.5 million or less. These are labeled non-broadband. According to
Census Bureau data for 2012, there were 3,117 firms in the first
category, total, that operated for the entire year. Of this total,
3,083 firms had employment of 999 or fewer employees. For the second
category, the data show that 1,442 firms operated for the entire year.
Of those, 1,400 had annual receipts below $25 million per year.
Consequently, we estimate that the majority of broadband Internet
access service provider firms are small entities.
416. The broadband Internet access service provider industry has
changed since this definition was introduced in 2007. The data cited
above may therefore include entities that no longer provide broadband
Internet access service, and may exclude entities that now provide such
service. To ensure that this FRFA describes the universe of small
entities that our action affects, we discuss in turn several different
types of entities that might be providing broadband Internet access
service, which also overlap with entities providing other
telecommunications services. We note that, although we have no specific
information on the number of small entities that provide broadband
Internet access service over unlicensed spectrum, we include these
entities in our Final Regulatory Flexibility Analysis.
3. Wireline Providers
417. Wired Telecommunications Carriers. The U.S. Census Bureau
defines this industry as ``establishments primarily engaged in
operating and/or providing access to transmission facilities and
infrastructure that they own and/or lease for the transmission of
voice, data, text, sound, and video using wired communications
networks. Transmission facilities may be based on a single technology
or a combination of technologies. Establishments in this industry use
the wired telecommunications network facilities that they operate to
provide a variety of services, such as wired telephony services,
including VoIP services, wired (cable) audio and video programming
distribution, and wired broadband internet services. By exception,
establishments providing satellite television distribution services
using facilities and infrastructure that they operate are included in
this industry.'' The SBA has developed a small business size standard
for Wired Telecommunications Carriers, which consists of all such
companies having 1,500 or fewer employees. Census data for 2012 shows
that there were 3,117 firms that operated that year. Of this total,
3,083 operated with fewer than 1,000 employees. Thus, under this size
standard, the majority of firms in this industry can be considered
small.
418. Local Exchange Carriers (LECs). Neither the Commission nor the
SBA has developed a size standard for small businesses specifically
applicable to local exchange services. The closest applicable NAICS
Code category is Wired Telecommunications Carriers as defined in this
FRFA. Under the applicable SBA size standard, such a business is small
if it has 1,500 or fewer employees. According to Commission data,
census data for 2012 shows that there were 3,117 firms that operated
that year. Of this total, 3,083 operated with fewer than 1,000
employees. The Commission therefore estimates that most providers of
local exchange carrier service are small entities that may be affected
by the rules adopted.
419. Incumbent Local Exchange Carriers (Incumbent LECs). Neither
the Commission nor the SBA has developed a small business size standard
specifically for incumbent local exchange services. The closest
applicable NAICS Code category is Wired Telecommunications Carriers as
defined in this FRFA. Under that size standard, such a business is
small if it has 1,500 or fewer employees. According to Commission data,
3,117 firms operated in that year. Of this total, 3,083 operated with
fewer than 1,000 employees. Consequently, the Commission estimates that
most providers of incumbent local exchange service are small businesses
that may be affected by the rules and policies adopted. Three hundred
and seven (307) Incumbent Local Exchange Carriers reported that they
were incumbent local exchange service providers. Of this total, an
estimated 1,006 have 1,500 or fewer employees.
420. Competitive Local Exchange Carriers (Competitive LECs),
Competitive Access Providers (CAPs), Shared-Tenant Service Providers,
and Other Local Service Providers. Neither the Commission nor the SBA
has developed a small business size standard specifically for these
service providers. The appropriate NAICS Code category is Wired
Telecommunications Carriers, as defined in this FRFA. Under that size
standard, such a business is small if it has 1,500 or fewer employees.
U.S. Census data for 2012 indicate that 3,117 firms operated during
that year. Of that number, 3,083 operated with fewer than 1,000
employees. Based on this data, the Commission concludes that the
majority of Competitive LECS, CAPs, Shared-Tenant Service Providers,
and Other Local Service Providers, are small entities. According to
Commission data, 1,442 carriers reported that they
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were engaged in the provision of either competitive local exchange
services or competitive access provider services. Of these 1,442
carriers, an estimated 1,256 have 1,500 or fewer employees. In
addition, 17 carriers have reported that they are Shared-Tenant Service
Providers, and all 17 are estimated to have 1,500 or fewer employees.
Also, 72 carriers have reported that they are Other Local Service
Providers. Of this total, 70 have 1,500 or fewer employees.
Consequently, based on internally researched FCC data, the Commission
estimates that most providers of competitive local exchange service,
competitive access providers, Shared-Tenant Service Providers, and
Other Local Service Providers are small entities.
421. We have included small incumbent LECs in this present RFA
analysis. As noted above, a ``small business'' under the RFA is one
that, inter alia, meets the pertinent small business size standard
(e.g., a telephone communications business having 1,500 or fewer
employees), and ``is not dominant in its field of operation.'' The
SBA's Office of Advocacy contends that, for RFA purposes, small
incumbent LECs are not dominant in their field of operation because any
such dominance is not ``national'' in scope. We have therefore included
small incumbent LECs in this RFA analysis, although we emphasize that
this RFA action has no effect on Commission analyses and determinations
in other, non-RFA contexts.
422. Interexchange Carriers. Neither the Commission nor the SBA has
developed a definition for Interexchange Carriers. The closest NAICS
Code category is Wired Telecommunications Carriers as defined in this
FRFA. The applicable size standard under SBA rules is that such a
business is small if it has 1,500 or fewer employees. U.S. Census data
for 2012 indicates that 3,117 firms operated during that year. Of that
number, 3,083 operated with fewer than 1,000 employees. According to
internally developed Commission data, 359 companies reported that their
primary telecommunications service activity was the provision of
interexchange services. Of this total, an estimated 317 have 1,500 or
fewer employees. Consequently, the Commission estimates that the
majority of interexchange service providers are small entities that may
be affected by the rules adopted.
423. Operator Service Providers (OSPs). Neither the Commission nor
the SBA has developed a small business size standard specifically for
operator service providers. The appropriate size standard under SBA
rules is for the category Wired Telecommunications Carriers. Under that
size standard, such a business is small if it has 1,500 or fewer
employees. According to Commission data, 33 carriers have reported that
they are engaged in the provision of operator services. Of these, an
estimated 31 have 1,500 or fewer employees and two have more than 1,500
employees. Consequently, the Commission estimates that the majority of
OSPs are small entities that may be affected by these rules.
424. Prepaid Calling Card Providers. Neither the Commission nor the
SBA has developed a small business definition specifically for prepaid
calling card providers. The most appropriate NAICS code-based category
for defining prepaid calling card providers is Telecommunications
Resellers. This industry comprises establishments engaged in purchasing
access and network capacity from owners and operators of
telecommunications networks and reselling wired and wireless
telecommunications services (except satellite) to businesses and
households. Establishments in this industry resell telecommunications;
they do not operate transmission facilities and infrastructure. Mobile
virtual networks operators (MVNOs) are included in this industry. Under
the applicable SBA size standard, such a business is small if it has
1,500 or fewer employees. U.S. Census data for 2012 show that 1,341
firms provided resale services during that year. Of that number, 1,341
operated with fewer than 1,000 employees. Thus, under this category and
the associated small business size standard, the majority of these
prepaid calling card providers can be considered small entities.
According to Commission data, 193 carriers have reported that they are
engaged in the provision of prepaid calling cards. All 193 carriers
have 1,500 or fewer employees. Consequently, the Commission estimates
that the majority of prepaid calling card providers are small entities
that may be affected by the rules adopted.
425. Local Resellers. Neither the Commission nor the SBA has
developed a small business size standard specifically for Local
Resellers. The SBA has developed a small business size standard for the
category of Telecommunications Resellers. Under that size standard,
such a business is small if it has 1,500 or fewer employees. Census
data for 2012 show that 1,341 firms provided resale services during
that year. Of that number, 1,341 operated with fewer than 1,000
employees. Under this category and the associated small business size
standard, the majority of these local resellers can be considered small
entities. According to Commission data, 213 carriers have reported that
they are engaged in the provision of local resale services. Of this
total, an estimated 211 have 1,500 or fewer employees. Consequently,
the Commission estimates that the majority of local resellers are small
entities that may be affected by the rules adopted.
426. Toll Resellers. The Commission has not developed a definition
for Toll Resellers. The closest NAICS Code Category is
Telecommunications Resellers, and the SBA has developed a small
business size standard for the category of Telecommunications
Resellers. Under that size standard, such a business is small if it has
1,500 or fewer employees. Census data for 2012 show that 1,341 firms
provided resale services during that year. Of that number, 1,341
operated with fewer than 1,000 employees. Thus, under this category and
the associated small business size standard, the majority of these
resellers can be considered small entities. According to Commission
data, 881 carriers have reported that they are engaged in the provision
of toll resale services. Of this total, an estimated 857 have 1,500 or
fewer employees. Consequently, the Commission estimates that the
majority of toll resellers are small entities.
427. Other Toll Carriers. Neither the Commission nor the SBA has
developed a definition for small businesses specifically applicable to
Other Toll Carriers. This category includes toll carriers that do not
fall within the categories of interexchange carriers, operator service
providers, prepaid calling card providers, satellite service carriers,
or toll resellers. The closest applicable NAICS Code category is for
Wired Telecommunications Carriers as defined in paragraph 6 of this
FRFA. Under the applicable SBA size standard, such a business is small
if it has 1,500 or fewer employees. Census data for 2012 shows that
there were 3,117 firms that operated that year. Of this total, 3,083
operated with fewer than 1,000 employees. Thus, under this category and
the associated small business size standard, the majority of Other Toll
Carriers can be considered small. According to internally developed
Commission data, 284 companies reported that their primary
telecommunications service activity was the provision of other toll
carriage. Of these, an estimated 279 have 1,500 or fewer employees.
Consequently, the Commission estimates that most Other Toll Carriers
are small entities.
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4. Wireless Providers--Fixed and Mobile
428. The telecommunications services category covered by these
rules may cover multiple wireless firms and categories of regulated
wireless services. In addition, for those services subject to auctions,
we note that, as a general matter, the number of winning bidders that
claim to qualify as small businesses at the close of an auction does
not necessarily represent the number of small businesses currently in
service. Also, the Commission does not generally track subsequent
business size unless, in the context of assignments and transfers or
reportable eligibility events, unjust enrichment issues are implicated.
429. Wireless Telecommunications Carriers (except Satellite). This
industry comprises establishments engaged in operating and maintaining
switching and transmission facilities to provide communications via the
airwaves. Establishments in this industry have spectrum licenses and
provide services using that spectrum, such as cellular services, paging
services, wireless internet access, and wireless video services. The
appropriate size standard under SBA rules is that such a business is
small if it has 1,500 or fewer employees. For this industry, Census
data for 2012 show that there were 967 firms that operated for the
entire year. Of this total, 955 firms had fewer than 1,000 employees.
Thus under this category and the associated size standard, the
Commission estimates that the majority of wireless telecommunications
carriers (except satellite) are small entities. Similarly, according to
internally developed Commission data, 413 carriers reported that they
were engaged in the provision of wireless telephony, including cellular
service, Personal Communications Service (PCS), and Specialized Mobile
Radio (SMR) services. Of this total, an estimated 261 have 1,500 or
fewer employees. Thus, using available data, we estimate that the
majority of wireless firms can be considered small.
430. Wireless Communications Services. This service can be used for
fixed, mobile, radiolocation, and digital audio broadcasting satellite
uses. The Commission defined ``small business'' for the wireless
communications services (WCS) auction as an entity with average gross
revenues of $40 million for each of the three preceding years, and a
``very small business'' as an entity with average gross revenues of $15
million for each of the three preceding years. The SBA has approved
these definitions.
431. 1670-1675 MHz Services. This service can be used for fixed and
mobile uses, except aeronautical mobile. An auction for one license in
the 1670-1675 MHz band was conducted in 2003. One license was awarded.
The winning bidder was not a small entity.
432. Wireless Telephony. Wireless telephony includes cellular,
personal communications services, and specialized mobile radio
telephony carriers. As noted, the SBA has developed a small business
size standard for Wireless Telecommunications Carriers (except
Satellite). Under the SBA small business size standard, a business is
small if it has 1,500 or fewer employees. According to Commission data,
413 carriers reported that they were engaged in wireless telephony. Of
these, an estimated 261 have 1,500 or fewer employees and 152 have more
than 1,500 employees. Therefore, a little less than one third of these
entities can be considered small.
433. Broadband Personal Communications Service. The broadband
personal communications services (PCS) spectrum is divided into six
frequency blocks designated A through F, and the Commission has held
auctions for each block. The Commission initially defined a ``small
business'' for C- and F-Block licenses as an entity that has average
gross revenues of $40 million or less in the three previous calendar
years. For F-Block licenses, an additional small business size standard
for ``very small business'' was added and is defined as an entity that,
together with its affiliates, has average gross revenues of not more
than $15 million for the preceding three calendar years. These small
business size standards, in the context of broadband PCS auctions, have
been approved by the SBA. No small businesses within the SBA-approved
small business size standards bid successfully for licenses in Blocks A
and B. There were 90 winning bidders that claimed small business status
in the first two C-Block auctions. A total of 93 bidders that claimed
small business status won approximately 40 percent of the 1,479
licenses in the first auction for the D, E, and F Blocks. On April 15,
1999, the Commission completed the reauction of 347 C-, D-, E-, and F-
Block licenses in Auction No. 22. Of the 57 winning bidders in that
auction, 48 claimed small business status and won 277 licenses.
434. On January 26, 2001, the Commission completed the auction of
422 C and F Block Broadband PCS licenses in Auction No. 35. Of the 35
winning bidders in that auction, 29 claimed small business status.
Subsequent events concerning Auction 35, including judicial and agency
determinations, resulted in a total of 163 C and F Block licenses being
available for grant. On February 15, 2005, the Commission completed an
auction of 242 C-, D-, E-, and F-Block licenses in Auction No. 58. Of
the 24 winning bidders in that auction, 16 claimed small business
status and won 156 licenses. On May 21, 2007, the Commission completed
an auction of 33 licenses in the A, C, and F Blocks in Auction No. 71.
Of the 12 winning bidders in that auction, five claimed small business
status and won 18 licenses. On August 20, 2008, the Commission
completed the auction of 20 C-, D-, E-, and F-Block Broadband PCS
licenses in Auction No. 78. Of the eight winning bidders for Broadband
PCS licenses in that auction, six claimed small business status and won
14 licenses.
435. Specialized Mobile Radio Licenses. The Commission awards
``small entity'' bidding credits in auctions for Specialized Mobile
Radio (SMR) geographic area licenses in the 800 MHz and 900 MHz bands
to firms that had revenues of no more than $15 million in each of the
three previous calendar years. The Commission awards ``very small
entity'' bidding credits to firms that had revenues of no more than $3
million in each of the three previous calendar years. The SBA has
approved these small business size standards for the 900 MHz Service.
The Commission has held auctions for geographic area licenses in the
800 MHz and 900 MHz bands. The 900 MHz SMR auction began on December 5,
1995, and closed on April 15, 1996. Sixty bidders claiming that they
qualified as small businesses under the $15 million size standard won
263 geographic area licenses in the 900 MHz SMR band. The 800 MHz SMR
auction for the upper 200 channels began on October 28, 1997, and was
completed on December 8, 1997. Ten bidders claiming that they qualified
as small businesses under the $15 million size standard won 38
geographic area licenses for the upper 200 channels in the 800 MHz SMR
band. A second auction for the 800 MHz band was held on January 10,
2002 and closed on January 17, 2002 and included 23 BEA licenses. One
bidder claiming small business status won five licenses.
436. The auction of the 1,053 800 MHz SMR geographic area licenses
for the General Category channels began on August 16, 2000, and was
completed on September 1, 2000. Eleven bidders won 108 geographic area
licenses for the General Category channels in the 800
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MHz SMR band and qualified as small businesses under the $15 million
size standard. In an auction completed on December 5, 2000, a total of
2,800 Economic Area licenses in the lower 80 channels of the 800 MHz
SMR service were awarded. Of the 22 winning bidders, 19 claimed small
business status and won 129 licenses. Thus, combining all four
auctions, 41 winning bidders for geographic licenses in the 800 MHz SMR
band claimed status as small businesses.
437. In addition, there are numerous incumbent site-by-site SMR
licenses and licensees with extended implementation authorizations in
the 800 and 900 MHz bands. We do not know how many firms provide 800
MHz or 900 MHz geographic area SMR service pursuant to extended
implementation authorizations, nor how many of these providers have
annual revenues of no more than $15 million. One firm has over $15
million in revenues. In addition, we do not know how many of these
firms have 1,500 or fewer employees, which is the SBA-determined size
standard. We assume, for purposes of this analysis, that all of the
remaining extended implementation authorizations are held by small
entities, as defined by the SBA.
438. Lower 700 MHz Band Licenses. The Commission previously adopted
criteria for defining three groups of small businesses for purposes of
determining their eligibility for special provisions such as bidding
credits. The Commission defined a ``small business'' as an entity that,
together with its affiliates and controlling principals, has average
gross revenues not exceeding $40 million for the preceding three years.
A ``very small business'' is defined as an entity that, together with
its affiliates and controlling principals, has average gross revenues
that are not more than $15 million for the preceding three years.
Additionally, the lower 700 MHz Service had a third category of small
business status for Metropolitan/Rural Service Area (MSA/RSA)
licenses--``entrepreneur''--which is defined as an entity that,
together with its affiliates and controlling principals, has average
gross revenues that are not more than $3 million for the preceding
three years. The SBA approved these small size standards. An auction of
740 licenses (one license in each of the 734 MSAs/RSAs and one license
in each of the six Economic Area Groupings (EAGs)) commenced on August
27, 2002, and closed on September 18, 2002. Of the 740 licenses
available for auction, 484 licenses were won by 102 winning bidders.
Seventy-two of the winning bidders claimed small business, very small
business or entrepreneur status and won a total of 329 licenses. A
second auction commenced on May 28, 2003, closed on June 13, 2003, and
included 256 licenses: 5 EAG licenses and 476 Cellular Market Area
licenses. Seventeen winning bidders claimed small or very small
business status and won 60 licenses, and nine winning bidders claimed
entrepreneur status and won 154 licenses. On July 26, 2005, the
Commission completed an auction of 5 licenses in the Lower 700 MHz band
(Auction No. 60). There were three winning bidders for five licenses.
All three winning bidders claimed small business status.
439. In 2007, the Commission reexamined its rules governing the 700
MHz band in the 700 MHz Second Report and Order. An auction of 700 MHz
licenses commenced January 24, 2008 and closed on March 18, 2008, which
included, 176 Economic Area licenses in the A Block, 734 Cellular
Market Area licenses in the B Block, and 176 EA licenses in the E
Block. Twenty winning bidders, claiming small business status (those
with attributable average annual gross revenues that exceed $15 million
and do not exceed $40 million for the preceding three years) won 49
licenses. Thirty three winning bidders claiming very small business
status (those with attributable average annual gross revenues that do
not exceed $15 million for the preceding three years) won 325 licenses.
440. Upper 700 MHz Band Licenses. In the 700 MHz Second Report and
Order, the Commission revised its rules regarding Upper 700 MHz
licenses. On January 24, 2008, the Commission commenced Auction 73 in
which several licenses in the Upper 700 MHz band were available for
licensing: 12 Regional Economic Area Grouping licenses in the C Block,
and one nationwide license in the D Block. The auction concluded on
March 18, 2008, with 3 winning bidders claiming very small business
status (those with attributable average annual gross revenues that do
not exceed $15 million for the preceding three years) and winning five
licenses.
441. 700 MHz Guard Band Licensees. In 2000, in the 700 MHz Guard
Band Order, the Commission adopted size standards for ``small
businesses'' and ``very small businesses'' for purposes of determining
their eligibility for special provisions such as bidding credits and
installment payments. A small business in this service is an entity
that, together with its affiliates and controlling principals, has
average gross revenues not exceeding $40 million for the preceding
three years. Additionally, a very small business is an entity that,
together with its affiliates and controlling principals, has average
gross revenues that are not more than $15 million for the preceding
three years. SBA approval of these definitions is not required. An
auction of 52 Major Economic Area licenses commenced on September 6,
2000, and closed on September 21, 2000. Of the 104 licenses auctioned,
96 licenses were sold to nine bidders. Five of these bidders were small
businesses that won a total of 26 licenses. A second auction of 700 MHz
Guard Band licenses commenced on February 13, 2001, and closed on
February 21, 2001. All eight of the licenses auctioned were sold to
three bidders. One of these bidders was a small business that won a
total of two licenses.
442. Air-Ground Radiotelephone Service. The Commission has
previously used the SBA's small business size standard applicable to
Wireless Telecommunications Carriers (except Satellite), i.e., an
entity employing no more than 1,500 persons. There are approximately
100 licensees in the Air-Ground Radiotelephone Service, and under that
definition, we estimate that almost all of them qualify as small
entities under the SBA definition. For purposes of assigning Air-Ground
Radiotelephone Service licenses through competitive bidding, the
Commission has defined ``small business'' as an entity that, together
with controlling interests and affiliates, has average annual gross
revenues for the preceding three years not exceeding $40 million. A
``very small business'' is defined as an entity that, together with
controlling interests and affiliates, has average annual gross revenues
for the preceding three years not exceeding $15 million. These
definitions were approved by the SBA. In May 2006, the Commission
completed an auction of nationwide commercial Air-Ground Radiotelephone
Service licenses in the 800 MHz band (Auction No. 65). On June 2, 2006,
the auction closed with two winning bidders winning two Air-Ground
Radiotelephone Services licenses. Neither of the winning bidders
claimed small business status.
443. AWS Services (1710-1755 MHz and 2110-2155 MHz bands (AWS-1);
1915-1920 MHz, 1995-2000 MHz, 2020-2025 MHz and 2175-2180 MHz bands
(AWS-2); 2155-2175 MHz band (AWS-3)). For the AWS-1 bands, the
Commission has defined a ``small business'' as an entity with average
annual gross revenues for the preceding three years not exceeding $40
million, and a ``very small business'' as an entity
[[Page 87338]]
with average annual gross revenues for the preceding three years not
exceeding $15 million. For AWS-2 and AWS-3, although we do not know for
certain which entities are likely to apply for these frequencies, we
note that the AWS-1 bands are comparable to those used for cellular
service and personal communications service. The Commission has not yet
adopted size standards for the AWS-2 or AWS-3 bands but proposes to
treat both AWS-2 and AWS-3 similarly to broadband PCS service and AWS-1
service due to the comparable capital requirements and other factors,
such as issues involved in relocating incumbents and developing
markets, technologies, and services.
444. 3650-3700 MHz band. In March 2005, the Commission released a
Report and Order and Memorandum Opinion and Order that provides for
nationwide, non-exclusive licensing of terrestrial operations,
utilizing contention-based technologies, in the 3650 MHz band (i.e.,
3650-3700 MHz). As of April 2010, more than 1270 licenses have been
granted and more than 7433 sites have been registered. The Commission
has not developed a definition of small entities applicable to 3650-
3700 MHz band nationwide, non-exclusive licensees. However, we estimate
that the majority of these licensees are Internet Access Service
Providers (ISPs) and that most of those licensees are small businesses.
445. Fixed Microwave Services. Microwave services include common
carrier, private-operational fixed, and broadcast auxiliary radio
services. They also include the Local Multipoint Distribution Service
(LMDS), the Digital Electronic Message Service (DEMS), and the 24 GHz
Service, where licensees can choose between common carrier and non-
common carrier status. At present, there are approximately 36,708
common carrier fixed licensees and 59,291 private operational-fixed
licensees and broadcast auxiliary radio licensees in the microwave
services. There are approximately 135 LMDS licensees, three DEMS
licensees, and three 24 GHz licensees. The Commission has not yet
defined a small business with respect to microwave services. For
purposes of the IRFA, we will use the SBA's definition applicable to
Wireless Telecommunications Carriers (except satellite)--i.e., an
entity with no more than 1,500 persons. Under the present and prior
categories, the SBA has deemed a wireless business to be small if it
has 1,500 or fewer employees. The Commission does not have data
specifying the number of these licensees that have more than 1,500
employees, and thus is unable at this time to estimate with greater
precision the number of fixed microwave service licensees that would
qualify as small business concerns under the SBA's small business size
standard. Consequently, the Commission estimates that there are up to
36,708 common carrier fixed licensees and up to 59,291 private
operational-fixed licensees and broadcast auxiliary radio licensees in
the microwave services that may be small and may be affected by the
rules and policies adopted herein. We note, however, that the common
carrier microwave fixed licensee category includes some large entities.
446. Broadband Radio Service and Educational Broadband Service.
Broadband Radio Service systems, previously referred to as Multipoint
Distribution Service (MDS) and Multichannel Multipoint Distribution
Service (MMDS) systems, and ``wireless cable,'' transmit video
programming to subscribers and provide two-way high speed data
operations using the microwave frequencies of the Broadband Radio
Service (BRS) and Educational Broadband Service (EBS) (previously
referred to as the Instructional Television Fixed Service (ITFS)). In
connection with the 1996 BRS auction, the Commission established a
small business size standard as an entity that had annual average gross
revenues of no more than $40 million in the previous three calendar
years. The BRS auctions resulted in 67 successful bidders obtaining
licensing opportunities for 493 Basic Trading Areas (BTAs). Of the 67
auction winners, 61 met the definition of a small business. BRS also
includes licensees of stations authorized prior to the auction. At this
time, we estimate that of the 61 small business BRS auction winners, 48
remain small business licensees. In addition to the 48 small businesses
that hold BTA authorizations, there are approximately 392 incumbent BRS
licensees that are considered small entities. After adding the number
of small business auction licensees to the number of incumbent
licensees not already counted, we find that there are currently
approximately 440 BRS licensees that are defined as small businesses
under either the SBA or the Commission's rules.
447. In 2009, the Commission conducted Auction 86, the sale of 78
licenses in the BRS areas. The Commission offered three levels of
bidding credits: (i) A bidder with attributed average annual gross
revenues that exceed $15 million and do not exceed $40 million for the
preceding three years (small business) received a 15 percent discount
on its winning bid; (ii) a bidder with attributed average annual gross
revenues that exceed $3 million and do not exceed $15 million for the
preceding three years (very small business) received a 25 percent
discount on its winning bid; and (iii) a bidder with attributed average
annual gross revenues that do not exceed $3 million for the preceding
three years (entrepreneur) received a 35 percent discount on its
winning bid. Auction 86 concluded in 2009 with the sale of 61 licenses.
Of the ten winning bidders, two bidders that claimed small business
status won 4 licenses; one bidder that claimed very small business
status won three licenses; and two bidders that claimed entrepreneur
status won six licenses.
448. In addition, the SBA's Cable Television Distribution Services
small business size standard is applicable to EBS. There are presently
2,436 EBS licensees. All but 100 of these licenses are held by
educational institutions. Educational institutions are included in this
analysis as small entities. Thus, we estimate that at least 2,336
licensees are small businesses. Since 2007, Cable Television
Distribution Services have been defined within the broad economic
census category of Wired Telecommunications Carriers; that category is
defined as follows: ``This industry comprises establishments primarily
engaged in operating and/or providing access to transmission facilities
and infrastructure that they own and/or lease for the transmission of
voice, data, text, sound, and video using wired telecommunications
networks. Transmission facilities may be based on a single technology
or a combination of technologies.'' The SBA has developed a small
business size standard for this category, which is: All such firms
having 1,500 or fewer employees. To gauge small business prevalence for
these cable services we must, however, use the most current census data
that are based on the previous category of Cable and Other Program
Distribution and its associated size standard; that size standard was:
All such firms having $13.5 million or less in annual receipts.
According to Census Bureau data for 2007, there were a total of 996
firms in this category that operated for the entire year. Of this
total, 948 firms had annual receipts of under $10 million, and 48 firms
had receipts of $10 million or more but less than $25 million. Thus,
the majority of these firms can be considered small.
5. Satellite Service Providers
449. Satellite Telecommunications Providers. Two economic census
[[Page 87339]]
categories address the satellite industry. The first category has a
small business size standard of $30 million or less in average annual
receipts, under SBA rules. The second has a size standard of $30
million or less in annual receipts.
450. The category of Satellite Telecommunications ``comprises
establishments primarily engaged in providing telecommunications
services to other establishments in the telecommunications and
broadcasting industries by forwarding and receiving communications
signals via a system of satellites or reselling satellite
telecommunications.'' For this category, Census Bureau data for 2012
show that there were a total of 333 firms that operated for the entire
year. Of this total, 299 firms had annual receipts of under $25
million. Consequently, we estimate that the majority of Satellite
Telecommunications firms are small entities that might be affected by
our action.
451. The second category of Other Telecommunications comprises,
inter alia, ``establishments primarily engaged in providing specialized
telecommunications services, such as satellite tracking, communications
telemetry, and radar station operation. This industry also includes
establishments primarily engaged in providing satellite terminal
stations and associated facilities connected with one or more
terrestrial systems and capable of transmitting telecommunications to,
and receiving telecommunications from, satellite systems.'' For this
category, census data for 2012 show that there were 1,442 firms that
operated for the entire year. Of these firms, a total of 1,400 had
gross annual receipts of less than $25 million. Thus, a majority of
``All Other Telecommunications'' firms potentially affected by the
rules adopted can be considered small.
6. Cable Service Providers
452. Cable and Other Program Distributors. Since 2007, these
services have been defined within the broad economic census category of
Wired Telecommunications Carriers; that category is defined as follows:
``This industry comprises establishments primarily engaged in operating
and/or providing access to transmission facilities and infrastructure
that they own and/or lease for the transmission of voice, data, text,
sound, and video using wired telecommunications networks. Transmission
facilities may be based on a single technology or a combination of
technologies.'' The SBA has developed a small business size standard
for this category, which is: All such firms having 1,500 or fewer
employees. To gauge small business prevalence for these cable services
we must, however, use current census data that are based on the
previous category of Cable and Other Program Distribution and its
associated size standard; that size standard was: All such firms having
$13.5 million or less in annual receipts. According to Census Bureau
data for 2007, there were a total of 2,048 firms in this category that
operated for the entire year. Of this total, 1,393 firms had annual
receipts of under $10 million, and 655 firms had receipts of $10
million or more. Thus, the majority of these firms can be considered
small.
453. Cable Companies and Systems. The Commission has also developed
its own small business size standards, for the purpose of cable rate
regulation. Under the Commission's rules, a ``small cable company'' is
one serving 400,000 or fewer subscribers, nationwide. Industry data
shows that there were 1,141 cable companies at the end of June 2012. Of
this total, all but ten cable operators nationwide are small under this
size standard. In addition, under the Commission's rules, a ``small
system'' is a cable system serving 15,000 or fewer subscribers. Current
Commission records show 4,945 cable systems nationwide. Of this total,
4,380 cable systems have less than 20,000 subscribers, and 565 systems
have 20,000 or more subscribers, based on the same records. Thus, under
this standard, we estimate that most cable systems are small entities.
454. Cable System Operators. The Communications Act also contains a
size standard for small cable system operators, which is ``a cable
operator that, directly or through an affiliate, serves in the
aggregate fewer than 1 percent of all subscribers in the United States
and is not affiliated with any entity or entities whose gross annual
revenues in the aggregate exceed $250,000,000.'' There are
approximately 52,403,705 cable video subscribers in the United States
today. Accordingly, an operator serving fewer than 524,037 subscribers
shall be deemed a small operator if its annual revenues, when combined
with the total annual revenues of all its affiliates, do not exceed
$250 million in the aggregate. Based on available data, we find that
all but nine incumbent cable operators are small entities under this
size standard. We note that the Commission neither requests nor
collects information on whether cable system operators are affiliated
with entities whose gross annual revenues exceed $250 million. Although
it seems certain that some of these cable system operators are
affiliated with entities whose gross annual revenues exceed $250
million, we are unable at this time to estimate with greater precision
the number of cable system operators that would qualify as small cable
operators under the definition in the Communications Act.
7. All Other Telecommunications
455. ``All Other Telecommunications'' is defined as follows: This
U.S. industry is comprised of establishments that are primarily engaged
in providing specialized telecommunications services, such as satellite
tracking, communications telemetry, and radar station operation. This
industry also includes establishments primarily engaged in providing
satellite terminal stations and associated facilities connected with
one or more terrestrial systems and capable of transmitting
telecommunications to, and receiving telecommunications from, satellite
systems. Establishments providing Internet services or voice over
Internet protocol (VoIP) services via client-supplied
telecommunications connections are also included in this industry. The
SBA has developed a small business size standard for ``All Other
Telecommunications,'' which consists of all such firms with gross
annual receipts of $32.5 million or less. For this category, census
data for 2012 show that there were 1,442 firms that operated for the
entire year. Of these firms, a total of 1,400 had gross annual receipts
of less than $25 million. Thus, a majority of ``All Other
Telecommunications'' firms potentially affected by the rules adopted
can be considered small.
E. Description of Projected Reporting, Recordkeeping, and Other
Compliance Requirements for Small Entities
456. The Order adopts requirements concerning (1) the provision of
meaningful notice of privacy policies; (2) customer approval for the
use and disclosure of customer PI; (3) reasonable data security; (4)
data breach notification; and (5) particular practices that raise
privacy concerns. The rules we adopt in the Order will apply to all
telecommunications carriers, including BIAS and voice service
providers.
457. Providing Meaningful Notice of Privacy Policies. We adopt
privacy policy notice requirements for all telecommunications carriers,
including small providers. We require telecommunications carriers to
provide notices of privacy policies at the point of sale prior to the
purchase of service, and also to make notices clearly, conspicuously,
and persistently available on carriers' Web sites and via
[[Page 87340]]
carriers' apps that are used to manage service, if any. These notices
must clearly inform customers about what customer proprietary
information the providers collect, how they use it, and under what
circumstances they share it. We also require that providers inform
their customers about customers' rights to opt in to or out (as the
case may be) of the use or sharing of their proprietary information. We
require that privacy notices be clear, conspicuous, comprehensible, and
not misleading; and written in the language with which the carrier
transacts business with the customer; but we do not require that they
be formatted in any specific manner. Finally, we require providers to
give their customers advance notice of material changes to their
privacy policies. We have declined to require periodic notice on an
annual or bi-annual basis, similar to what the preexisting CPNI rules
require.
458. Customer Approval Requirements for the Use and Disclosure of
Customer PI. We require carriers to obtain express, informed customer
consent (i.e., opt-in approval) for the use and sharing of sensitive
customer PI. With respect to non-sensitive customer PI, carriers must,
at a minimum, provide their customers the ability to opt out of the
carrier's use or sharing of that non-sensitive customer information.
Carriers must also provide customers with easy access to a choice
mechanism that is simple, easy-to-use, clearly and conspicuously
disclosed, persistently available, and made available at no additional
cost to the customer. We require telecommunications carriers to solicit
customer approval at the point of sale, and permit further
solicitations after the point of sale. We also require that carriers
actively contact their customers in these subsequent solicitations, to
ensure that customers are adequately informed. Finally, we require the
solicitations to be clear and conspicuous, comprehensible, not
misleading, and to contain the information necessary for a customer to
make an informed choice. This means the solicitations must inform
customers of the types of customer proprietary information that the
carrier is seeking to use, disclose, or permit access to, how those
types of information will be used or shared, and the categories of
entities with which that information is shared. In order to maintain
flexibility, we do not require particular formats or methods by which a
carrier must communicate its solicitation of consent to customers.
459. Our rules allow providers to use and disclose customer data
without approval if the data is properly de-identified. This option
gives providers carriers, including small providers, a way to use
customer information that avoids both the risks associated with
identifiable information and any compliance costs associated with
obtaining customer approval.
460. Reasonable Data Security. We require telecommunications
carriers to take reasonable measures to secure customer PI. We decline
to mandate specific activities that providers must undertake in order
to meet this reasonableness requirement. We do, however, offer guidance
on the types of data security practices we recommend carriers strongly
consider as they seek to comply with our data security requirement,
while recognizing that what constitutes ``reasonable'' data security is
an evolving concept. When considering whether a carrier's data security
practices are reasonable, we will weigh the nature and scope of the
carrier's activities, the sensitivity of the underlying data, the size
of the carrier, and technical feasibility. We recognize that the
resources and data practices of small carriers are likely to be
different from large carriers, and therefore what constitutes
``reasonable'' data security for a small carrier and a large carrier
may differ. The totality of the circumstances, and not any individual
factor, is determinative of whether a carrier's practices are
reasonable. By requiring providers to take reasonable data security
measures, we make clear that providers will not be held strictly liable
for all data breaches.
461. Data Breach Notification Requirements. We require BIAS
providers and other telecommunications carriers to notify affected
customers, the Commission--and, when a breach affects 5,000 or more
customers, the FBI and Secret Service--of data breaches that meet a
harm-based trigger. In particular, a carrier must report the breach
unless it reasonably determines that no harm to customers is reasonably
likely to occur. Customer breach notifications must include the date,
estimated date, or estimated date range of the breach; a description of
the customer PI that was breached; contact information for the carrier;
contact information for the FCC and any relevant state agencies; and
information about credit-reporting agencies and steps customers can
take to avoid identity theft. We also require providers to keep
records, for two years, of the dates of breaches and the dates when
customers are notified.
462. When a reportable breach affects 5,000 or more customers, a
provider must notify the Commission and the FBI and Secret Service
within seven (7) business days of when the carrier reasonably
determines that such a breach has occurred, and at least three (3)
business days before notifying customers. The Commission will create a
centralized portal for reporting breaches to the Commission and other
federal law enforcement agencies. Carriers must notify affected
customers without unreasonable delay, and no later than 30 calendar
days following the carriers' reasonable determination that a breach has
occurred, unless the FBI or Secret Service requests a further delay.
When a reportable breach does not meet the 5,000-customer threshold for
reporting to the FBI and Secret Service, the Commission may be notified
of the breach within the same no-more-than-30-days timeframe as
affected customers.
463. Particular Practices That Raise Privacy Concerns. The Order
prohibits BIAS providers from conditioning the provision of service on
a customer's consenting to use or sharing of the customer's proprietary
information over which our rules provide the consumer with a right of
approval. However, the Order does not prohibit BIAS providers from
offering financial incentives to permit the use or disclosure of such
information. The Order requires BIAS providers offering such incentives
to provide clear notice explaining the terms of any financial incentive
program and to obtain opt-in consent. The notice must be clear and
conspicuous and explained in a way that is comprehensible and not
misleading. The explanation must include information about what
customer PI the provider will collect, how it will be used, with what
types of entities it will be shared, and for what purposes. BIAS
providers must make financial incentive notices easily accessible and
separate from any other privacy notifications. When a BIAS provider
markets a service plan that involves an exchange of personal
information for reduced pricing or other benefits, it must also provide
at least as prominent information to customers about an equivalent plan
that does not include such an exchange. BIAS providers must also comply
with all notice requirements of our rules when providing a financial
incentive notice.
F. Steps Take To Minimize the Significant Economic Impact on Small
Entities and Significant Alternatives Considered
464. The RFA requires an agency to describe any significant,
specifically small business, alternatives that it has considered in
reaching its proposed
[[Page 87341]]
approach, which may include the following four alternatives (among
others): ``(1) The establishment of differing compliance or reporting
requirements or timetables that take into account the resources
available to small entities; (2) the clarification, consolidation, or
simplification of compliance and reporting requirements under the rule
for such small entities; (3) the use of performance rather than design
standards; and (4) an exemption from coverage of the rule, or any part
thereof, for such small entities.''
465. The Commission considered the economic impact on small
providers, as identified in comments filed in response to the NPRM and
IRFA, in reaching its final conclusions and taking action in this
proceeding. Moreover, in formulating these rules, we have sought to
provide flexibility for small providers whenever possible, including by
avoiding prescription of the specific practices carriers must follow to
achieve compliance. Additionally, harmonizing our rules across all
telecommunications services will reduce and streamline compliance costs
for small carriers. We have also adopted a phased-in implementation
schedule, under which small providers are given an extra twelve months
to come into compliance with the notice and approval requirements we
adopt today. As discussed below, we have designed the rules we adopt
today with the goal of minimizing burdens on all carriers, and
particularly on small carriers.
466. Providing Meaningful Notice of Privacy Policies. Recognizing
the importance of flexibility in finding successful ways to communicate
privacy policies to consumers, we decline to adopt any specific form or
format for privacy notices. We adopt rules that require providers to
disclose their privacy practices, but decline to be prescriptive about
either the format or specific content of privacy policy notices in
order to provide flexibility to providers and to minimize the burden of
compliance levied by this requirement. In the interest of further
minimizing the burden of transparency, particularly for small
providers, we also direct the Consumer Advisory Committee to develop a
model privacy policy notice that will serve as a safe harbor for our
notice requirements. We also decline to adopt specific notice
requirements in mobile formats and we decline to require periodic
notices of privacy practices.
467. Customer Approval Requirements for the Use and Disclosure of
Customer PI. In formulating customer approval requirements we have
taken specific actions to reduce burdens on small carriers. First, as
requested by small carriers and other commenters, we harmonize the
voice and BIAS customer approval regimes into one set of rules. Second,
we do not require carriers to provide a ``privacy dashboard'' for
customer approvals; carriers may use any choice mechanism that is easy
to use, persistently available, and clearly and conspicuously provided.
This reduces the need for small carriers to develop specific customer
service architecture. Third, we decline to require a specific format
for accepting customer privacy choices and therefore allow carriers,
particularly small carriers, that lack sophisticated Web sites or apps
to accept customer choices through other means, such as by email or
phone, so long as these means are persistently available. Fourth, we
eliminate the periodic compliance documentation and reporting
requirements that create recordkeeping burdens in our pre-existing CPNI
rules. To further reduce compliance burdens, we have clarified that
choice solicitations may be combined a carrier's other privacy policy
notices.
468. Reasonable Data Security. In the NPRM we proposed rules that
included an overarching data security expectation and specified
particular types of practices that carriers would need to implement to
comply with that standard, while allowing carriers flexibility in
implementing the proposed requirements. Based on the record in this
proceeding, we have modified the overarching data security standard to
more directly focus on reasonableness of the carriers' data security
practices based on the particulars of the carrier's situation. Also
based on the record, we decline to mandate specific activities that
carriers must undertake in order to meet the reasonable data security
requirement. We do, however, offer guidance on the types of data
security practices we recommend carriers strongly consider as they seek
to comply with our data security requirement--recognizing, of course,
that what constitutes ``reasonable'' data security is an evolving
concept. This guidance should be of particular benefit to smaller
providers that may have less established data security programs. Also,
our rule directs all providers--including small providers--to adopt
contextually appropriate security practices. Contextual factors
specified in the rule include the size of the provider and nature and
scope of its activities. In including such factors, we take into
account small providers' concerns that certain security measures that
may be appropriate for larger carriers, such as having a dedicated
official to oversee data security implementation, are likely beyond the
needs and resources of the smallest carriers.
469. Data Breach Notification Requirements. In formulating our data
breach rules, we specifically considered their impact on small carriers
and crafted rules designed to balance the burdens on small carriers
with the privacy and information security needs of those carriers'
customers. First, our adoption of a harm-based trigger substantially
reduces compliance burdens on small carriers by not requiring excessive
notifications and by granting carriers the flexibility to focus their
limited resources on preventing and ameliorating breaches, rather than
issuing notifications for inconsequential events. The record shows that
because small carriers tend to collect and use customer data far less
extensively than larger carriers, they are less likely to have breaches
that would trigger the notification requirements of our rules. Second,
our customer notification timeline also provides small carriers with
greater flexibility; allowing up to 30 days to notify customers of a
breach allows small carriers with fewer resources more time to
investigate than the 10 days originally proposed. Third, we are
creating a centralized portal for reporting data breaches to the
Commission and law enforcement. This will streamline the notification
process, which particularly reduces burdens on small carriers with
fewer staff dedicated to breach mitigation. Finally, for breaches
affecting fewer than 5,000 customers, we extend the Commission
notification deadline from seven (7) business days to thirty (30)
calendar days. This provision will significantly reduce compliance
burdens for small carriers, many of whom have fewer than 5,000
customers.
470. Implementation. To provide certainty to customers and carriers
alike, we establish a timeline by which carriers must implement the
privacy rules we adopt today. Carriers that have complied with FTC and
industry best practices will be well-positioned to achieve prompt
compliance with our privacy rules. We recognize, however, that
carriers, especially small carriers, will need some time to update
their internal business processes as well as their customer-facing
privacy policies and choice mechanisms in order to come into compliance
with some of our rules.
471. The notice and choice rules we adopt today will become
effective the later of (1) eight weeks after
[[Page 87342]]
announcement PRA approval, or (12) twelve months after the Commission
publishes a summary of the Order in the Federal Register. Carriers will
need to analyze the new, harmonized privacy rules as well as coordinate
with various business segments and vendors, and update programs and
policies. Carriers will also need to engage in consumer outreach and
education. These implementation steps will take time and we find, as
supported in the record, that twelve months after publication of the
Order in the Federal Register is an adequate minimum implementation
period to implement the new notice and approval rules. In order to
minimize disruption to carriers' business practices, we do not require
carriers to obtain new consent from all their customers. Rather, we
treat as valid or ``grandfather'' any customer consent that was
obtained prior to the effective date of our rules and thus is
consistent with our new requirements. We decline to more broadly
grandfather preexisting consents obtained by small carriers because we
find that the parameters set forth in our rules create the appropriate
balance to limit compliance costs while providing customers the privacy
protections they need.
472. The data breach rule we adopt today will become effective the
later of (1) eight weeks after announcement PRA approval, or (2) six
months after the Commission publishes a summary of the Order in the
Federal Register. Although we recognize that carriers may have to
modify practices and policies to implement our new rule, we find the
harm trigger we adopt and timeline for notifying customers lessen the
implementation requirements. Moreover, harmonization of our data breach
rule for BIAS and voice services enable providers to streamline their
notification processes, which should also lessen carriers' need for
implementation time. Given these steps to minimize compliance burdens,
we find six months is an adequate minimum timeframe.
473. The data security requirements we adopt today will become
effective 90 days after publication of a summary of the Order in the
Federal Register. We find this to be an appropriate implementation
period for the data security requirements because carriers should
already be largely in compliance with these requirements because the
reasonableness standard adopted in this Order provides carriers
flexibility in how to approach data security and resembles the
obligation to which they were previously subject pursuant to section 5
of the FTC Act. We therefore do not think the numerous steps outlined
by commenters that would have been necessary to comply with the data
security proposals in the NPRM apply to the data security rules we
adopt.
474. The prohibition on conditioning offers to provider BIAS on a
customer's agreement to waive privacy rights will become effective 30
days after publication of a summary of the Order in the Federal
Register. We find that unlike other privacy rules, consumers should
benefit from this prohibition promptly. We find no basis for any delay
in the effective date of this important protection. All other privacy
rules adopted in the Order will be effective 30 days after publication
of a summary of the Order in the Federal Register. We also adopt a
uniform implementation timetable for both BIAS and other
telecommunications services.
475. To provide additional flexibility to small carriers, we give
small carriers an additional twelve months to implement the notice and
customer approval rules we adopt today. We find that an additional one-
year phase-in will allow small providers time to make the necessary
investments to implement these rules. The record reflects that small
providers have comparatively limited resources and rely extensively on
vendors over which they have limited leverage to compel adoption of new
requirements. We recognize our notice and choice framework may entail
upfront costs for small carriers. As such, we find that this limited
extension is appropriate.
476. We have considered, but opt against, providing small providers
with even longer or broader extension periods, or with exemptions from
the rules, as some commenters suggest. In part, this is because the
measures we have taken to reduce burdens for small providers have in
many cases mitigated commenters' specific concerns. For instance, we
find that we have addressed small provider concerns about the adoption
of specific security requirements, such as annual risk assessments, by
adopting a data security rule that does not prescribe any such
requirements. Moreover, as advocated by small providers, we adopt a
customer choice framework that distinguishes between sensitive and non-
sensitive customer information, as well as decline to mandate a
customer-facing dashboard to help manage their implementation and
compliance costs. Furthermore, we find that our data breach
notification requirements and ``take-it-or-leave-it'' prohibition do
not require implementation extension for small providers as compliance
with these protections should not be costly for small carriers that
generally collect less customer information and use customer
information for narrower purposes.
Report to Congress: The Commission will send a copy of the Order,
including this FRFA, in a report to be sent to Congress pursuant to the
Congressional Review Act. In addition, the Commission will send a copy
of the Order, including this FRFA, to the Chief Counsel for Advocacy of
the SBA. A copy of the Order and FRFA (or summaries thereof) will also
be published in the Federal Register.
VII. Ordering Clauses
477. Accordingly, it is ordered that, pursuant to sections 1, 2,
4(i)-(j), 201, 202, 222, 303(b), 303(r), 316, 338(i), 631, and 705 of
the Communications Act of 1934, as amended, and Section 706 of the
Telecommunications Act of 1996, as amended, 47 U.S.C. 151, 152, 154(i)-
(j), 201, 202, 222, 303(b), 303(r), 316, 338(i), 551, 605, 1302, this
Report and Order is adopted.
478. It is further ordered that part 64 of the Commission's rules
IS AMENDED as set forth in Appendix A.
479. It is further ordered that the data security requirements set
forth in new 47 CFR 64.2005 shall be effective 90 days after
publication in the Federal Register.
480. It is further ordered that, except as set forth in the prior
paragraph, this Report and Order shall be effective 30 days after date
of publication of a summary in the Federal Register, except that the
amendments to 47 CFR 64.2003, 64.2004, 64.2006, and 64.2011(b), which
contain new or modified information collection requirements that
require approval by the Office of Management and Budget under the
Paperwork Reduction Act, will become effective after the Commission
publishes a notice in the Federal Register announcing such approval and
the relevant effective date. It is our intention in adopting the
foregoing Report and Order that, if any provision of the Report and
Order or the rules, or the application thereof to any person or
circumstance, is held to be unlawful, the remaining portions of such
Report and Order and the rules not deemed unlawful, and the application
of such Report and Order and the rules to other person or
circumstances, shall remain in effect to the fullest extent permitted
by law.
481. It is further ordered that the Commission's Consumer &
Governmental Affairs Bureau, Reference Information Center, shall send a
copy of this Report and Order to Congress and the Government
Accountability Office pursuant to the Congressional Review Act, see 5
U.S.C. 801(a)(1)(A).
[[Page 87343]]
482. It is further ordered that the Commission's Consumer &
Governmental Affairs Bureau, Reference Information Center, SHALL SEND a
copy of this Report and Order, including the Final Regulatory
Flexibility Analysis, to the Chief Counsel for Advocacy of the Small
Business Administration.
List of Subjects in 47 CFR Part 64
Claims, Communications common carriers, Computer technology,
Credit, Foreign relations, Individuals with disabilities, Political
candidates, Radio, Reporting and recordkeeping requirements,
Telecommunications, Telegraph, Telephone.
Federal Communications Commission.
Marlene H. Dortch,
Secretary.
Final Rules
For the reasons discussed in the preamble, the Federal
Communications Commission amends 47 CFR part 64 as follows:
PART 64--MISCELLANEOUS RULES RELATING TO COMMON CARRIERS
0
1. The authority citation for part 64 is revised to read as follows:
Authority: 47 U.S.C. 154, 254(k), 403, Pub. L. 104-104, 110
Stat. 56. Interpret or apply 47 U.S.C. 201, 202, 218, 222, 225, 226,
227, 228, 254(k), 301, 303, 332, 338, 551, 616, 620, 705, 1302, and
the Middle Class Tax Relief and Job Creation Act of 2012, Pub. L.
112-96, unless otherwise noted.
0
2. In part 64, revise subpart U to read as follows:
Subpart U--Protecting Customer Information
Sec.
64.2001 Basis and purpose.
64.2002 Definitions.
64.2003 Notice requirements for telecommunications carriers.
64.2004 Customer approval.
64.2005 Data security.
64.2006 Data breach notification.
64.2010 Business customer exemption for provision of
telecommunications services other than BIAS.
64.2011 BIAS offers conditioned on waiver of privacy rights.
64.2012 Effect on State law.
Subpart U--Protecting Customer Information
Sec. 64.2001 Basis and purpose.
(a) Basis. The rules in this subpart are issued pursuant to the
Communications Act of 1934, as amended.
(b) Purpose. The purpose of the rules in this subpart is to
implement section 222 of the Communications Act of 1934, as amended, 47
U.S.C. 222.
Sec. 64.2002 Definitions.
The following definitions apply to this subpart.
(a) Broadband Internet access service (BIAS). The term ``broadband
Internet access service'' or ``BIAS'' has the same meaning given to
such term in section 8.2(a) of this chapter.
(b) Broadband Internet Access service provider. The term
``broadband Internet access service provider'' or ``BIAS provider''
means a person engaged in the provision of BIAS.
(c) Breach of security. The terms ``breach of security,''
``breach,'' or ``data breach,'' mean any instance in which a person,
without authorization or exceeding authorization, has gained access to,
used, or disclosed customer proprietary information.
(d) Call detail information. Any information that pertains to the
transmission of specific telephone calls, including, for outbound
calls, the number called, and the time, location, or duration of any
call and, for inbound calls, the number from which the call was placed,
and the time, location, or duration of any call.
(e) Customer. A customer of a telecommunications carrier is:
(1) A current or former subscriber to a telecommunications service;
or
(2) An applicant for a telecommunications service.
(f) Customer proprietary information. The term ``customer
proprietary information'' or ``customer PI'' means any of the following
a carrier acquires in connection with its provision of
telecommunications service:
(1) Individually identifiable customer proprietary network
information (CPNI);
(2) Personally identifiable information (PII); and
(3) Content of communications.
(g) Customer proprietary network information (CPNI). The term
``customer proprietary network information'' or ``CPNI'' has the same
meaning given to such term in section 222(h)(1) of the Communications
Act of 1934, as amended, 47 U.S.C. 222(h)(1).
(h) Interconnected Voice over Internet Protocol (VoIP) Service. The
term ``interconnected VoIP service'' has the same meaning given to such
term in Sec. 9.3 of this chapter.
(i) Material change. The term ``material change'' means any change
that a customer, acting reasonably under the circumstances, would
consider important to his or her decisions regarding his or her
privacy, including any change to information required by the privacy
notice described in Sec. 64.2003.
(j) Opt-in approval. A method for obtaining customer consent to
use, disclose, or permit access to the customer's proprietary
information. This approval method requires that the carrier obtain from
the customer affirmative, express consent allowing the requested usage,
disclosure, or access to the customer proprietary information after the
customer is provided appropriate notification of the carrier's request
consistent with the requirements set forth in this subpart.
(k) Opt-out approval. A method for obtaining customer consent to
use, disclose, or permit access to the customer's proprietary
information. Under this approval method, a customer is deemed to have
consented to the use, disclosure, or access to the customer's
proprietary information if the customer has failed to object thereto
after the customer is provided appropriate notification of the
carrier's request for consent consistent with the requirements set
forth in this subpart.
(l) Person. The term ``person'' has the same meaning given such
term in section 3 of the Communications Act of 1934, as amended, 47
U.S.C. 153.
(m) Personally identifiable information (PII). The term
``personally identifiable information'' or ``PII'' means any
information that is linked or reasonably linkable to an individual or
device.
(n) Sensitive customer proprietary information. The terms
``sensitive customer proprietary information'' or ``sensitive customer
PI'' include:
(1) Financial information;
(2) Health information;
(3) Information pertaining to children;
(4) Social Security numbers;
(5) Precise geo-location information;
(6) Content of communications;
(7) Call detail information; and
(8) Web browsing history, application usage history, and the
functional equivalents of either.
(o) Telecommunications carrier or carrier. The terms
``telecommunications carrier'' or ``carrier'' shall have the same
meaning as set forth in section 3 of the Communications Act of 1934, as
amended, 47 U.S.C. 153. For the purposes of this subpart, the term
``telecommunications carrier'' or ``carrier'' shall include a person
engaged in the provision of interconnected VoIP service, as that term
is defined in paragraph (h) of this section.
(p) Telecommunications service. The term ``telecommunications
service'' has the same meaning given to such term in section 3 of the
Communications Act of 1934, as amended, 47 U.S.C. 153. For the purposes
of this subpart, the term ``telecommunications service'' shall include
interconnected VoIP service, as
[[Page 87344]]
that term is defined in paragraph (h) of this section.
Sec. 64.2003 Notice requirements for telecommunications carriers.
(a) A telecommunications carrier must notify its customers of its
privacy policies. Such notice must be clear and conspicuous, and in
language that is comprehensible and not misleading.
(b) Contents. A telecommunications carrier's notice of its privacy
policies under paragraph (a) must:
(1) Specify and describe the types of customer proprietary
information that the telecommunications carrier collects by virtue of
its provision of telecommunications service and how it uses that
information;
(2) Specify and describe under what circumstances the
telecommunications carrier discloses or permits access to each type of
customer proprietary information that it collects;
(3) Specify and describe the categories of entities to which the
carrier discloses or permits access to customer proprietary information
and the purposes for which the customer proprietary information will be
used by each category of entities;
(4) Specify and describe customers' opt-in approval and/or opt-out
approval rights with respect to their customer proprietary information,
including:
(i) That a customer's denial or withdrawal of approval to use,
disclose, or permit access to customer proprietary information will not
affect the provision of any telecommunications services of which he or
she is a customer; and
(ii) That any grant, denial, or withdrawal of approval for the use,
disclosure, or permission of access to the customer proprietary
information is valid until the customer affirmatively revokes such
grant, denial, or withdrawal, and inform the customer of his or her
right to deny or withdraw access to such proprietary information at any
time.
(5) Provide access to a mechanism for customers to grant, deny, or
withdraw approval for the telecommunications carrier to use, disclose,
or provide access to customer proprietary information as required by
Sec. 64.2004;
(6) Be completely translated into a language other than English if
the telecommunications carrier transacts business with the customer in
that language.
(c) Timing. Notice required under paragraph (a) of this section
must:
(1) Be made available to prospective customers at the point of
sale, prior to the purchase of service, whether such point of sale is
in person, online, over the telephone, or via another means; and
(2) Be made persistently available through: A clear and conspicuous
link on the telecommunications carrier's homepage; the carrier's
application (app), if it provides one for account management purposes;
and any functional equivalent to the carrier's homepage or app. If a
carrier does not have a Web site, it must provide notice to customers
in paper form or another format agreed upon by the customer.
(d) Material changes to a telecommunications carrier's privacy
policies. A telecommunications carrier must provide existing customers
with advance notice of one or more material changes to the carrier's
privacy policies. Such notice must be clear and conspicuous, and in
language that is comprehensible and not misleading, and must:
(1) Be provided through email or another means of active
communication agreed upon by the customer;
(2) Specify and describe:
(i) The changes made to the telecommunications carrier's privacy
policies, including any changes to what customer proprietary
information the carrier collects, and how it uses, discloses, or
permits access to such information, the categories of entities to which
it discloses or permits access to customer proprietary information, and
which, if any, changes are retroactive; and
(ii) Customers' opt-in approval and/or opt-out approval rights with
respect to their customer proprietary information, including the
material specified in paragraph (b)(4) of this section;
(3) Provide access to a mechanism for customers to grant, deny, or
withdraw approval for the telecommunications carrier to use, disclose,
or permit access to customer proprietary information as required by
Sec. 64.2004; and
(4) Be completely translated into a language other than English if
the telecommunications carrier transacts business with the customer in
that language.
Sec. 64.2004 Customer approval.
Except as described in paragraph (a) of this section, a
telecommunications carrier may not use, disclose, or permit access to
customer proprietary information except with the opt-out or opt-in
approval of a customer as described in this section.
(a) Limitations and exceptions. A telecommunications carrier may
use, disclose, or permit access to customer proprietary information
without customer approval for the following purposes:
(1) In its provision of the telecommunications service from which
such information is derived, or in its provision of services necessary
to, or used in, the provision of such service.
(2) To initiate, render, bill, and collect for telecommunications
service.
(3) To protect the rights or property of the telecommunications
carrier, or to protect users of the telecommunications service and
other providers from fraudulent, abusive, or unlawful use of the
service.
(4) To provide any inbound marketing, referral, or administrative
services to the customer for the duration of a real-time interaction,
if such interaction was initiated by the customer.
(5) To provide location information and/or non-sensitive customer
proprietary information to:
(i) A public safety answering point, emergency medical service
provider or emergency dispatch provider, public safety, fire service,
or law enforcement official, or hospital emergency or trauma care
facility, in order to respond to the user's request for emergency
services;
(ii) Inform the user's legal guardian or members of the user's
immediate family of the user's location in an emergency situation that
involves the risk of death or serious physical harm; or
(iii) Providers of information or database management services
solely for purposes of assisting in the delivery of emergency services
in response to an emergency.
(6) As otherwise required or authorized by law.
(b) Opt-out approval required. Except as otherwise provided in this
section, a telecommunications carrier must obtain opt-out approval from
a customer to use, disclose, or permit access to any of the customer's
non-sensitive customer proprietary information. If it so chooses, a
telecommunications carrier may instead obtain opt-in approval from a
customer to use, disclose, or permit access to any of the customer's
non-sensitive customer proprietary information.
(c) Opt-in approval required. Except as otherwise provided in this
section, a telecommunications carrier must obtain opt-in approval from
a customer to:
(1) Use, disclose, or permit access to any of the customer's
sensitive customer proprietary information; or
(2) Make any material retroactive change--i.e., a material change
that would result in a use, disclosure, or permission of access to any
of the customer's proprietary information previously collected by the
carrier for which the customer did not previously grant approval,
either through opt-in or opt-out consent, as required by paragraphs (b)
and (c) of this section.
[[Page 87345]]
(d) Notice and solicitation required. (1) Except as described in
paragraph (a) of this section, a telecommunications carrier must at a
minimum solicit customer approval pursuant to paragraph (b) and/or (c),
as applicable, at the point of sale and when making one or more
material changes to privacy policies. Such solicitation may be part of,
or the same communication as, a notice required by Sec. 64.2003.
(2) A telecommunications carrier's solicitation of customer
approval must be clear and conspicuous, and in language that is
comprehensible and not misleading. Such solicitation must disclose:
(i) The types of customer proprietary information for which the
carrier is seeking customer approval to use, disclose, or permit access
to;
(ii) The purposes for which such customer proprietary information
will be used;
(iii) The categories of entities to which the carrier intends to
disclose or permit access to such customer proprietary information; and
(iv) A means to easily access the notice required by Sec.
64.2003(a) and a means to access the mechanism required by paragraph
(e) of this section.
(3) A telecommunications carrier's solicitation of customer
approval must be completely translated into a language other than
English if the telecommunications carrier transacts business with the
customer in that language.
(e) Mechanism for exercising customer approval. A
telecommunications carrier must make available a simple, easy-to-use
mechanism for customers to grant, deny, or withdraw opt-in approval
and/or opt-out approval at any time. Such mechanism must be clear and
conspicuous, in language that is comprehensible and not misleading, and
made available at no additional cost to the customer. Such mechanism
must be persistently available on or through the carrier's Web site;
the carrier's application (app), if it provides one for account
management purposes; and any functional equivalent to the carrier's
homepage or app. If a carrier does not have a Web site, it must provide
a persistently available mechanism by another means such as a toll-free
telephone number. The customer's grant, denial, or withdrawal of
approval must be given effect promptly and remain in effect until the
customer revokes or limits such grant, denial, or withdrawal of
approval.
Sec. 64.2005 Data security.
(a) A telecommunications carrier must take reasonable measures to
protect customer PI from unauthorized use, disclosure, or access.
(b) The security measures taken by a telecommunications carrier to
implement the requirement set forth in this section must appropriately
take into account each of the following factors:
(1) The nature and scope of the telecommunications carrier's
activities;
(2) The sensitivity of the data it collects;
(3) The size of the telecommunications carrier; and
(4) Technical feasibility.
(c) A telecommunications carrier may employ any lawful security
measures that allow it to implement the requirement set forth in this
section.
Sec. 64.2006 Data breach notification.
(a) Customer notification. A telecommunications carrier shall
notify affected customers of any breach without unreasonable delay and
in any event no later than 30 calendar days after the carrier
reasonably determines that a breach has occurred, subject to law
enforcement needs, unless the telecommunications carrier can reasonably
determine that no harm to customers is reasonably likely to occur as a
result of the breach.
(1) A telecommunications carrier required to provide notification
to a customer under this paragraph must provide such notice by one or
more of the following methods:
(i) Written notification sent to either the customer's email
address or the postal address on record of the customer, or, for former
customers, to the last postal address ascertainable after reasonable
investigation using commonly available sources; or
(ii) Other electronic means of active communications agreed upon by
the customer for contacting that customer for data breach notification
purposes.
(2) The customer notification required to be provided under this
paragraph must include:
(i) The date, estimated date, or estimated date range of the breach
of security;
(ii) A description of the customer PI that was breached or
reasonably believed to have been breached;
(iii) Information the customer can use to contact the
telecommunications carrier to inquire about the breach of security and
the customer PI that the telecommunications carrier maintains about
that customer;
(iv) Information about how to contact the Federal Communications
Commission and any state regulatory agencies relevant to the customer
and the service; and
(v) If the breach creates a risk of financial harm, information
about the national credit-reporting agencies and the steps customers
can take to guard against identity theft, including any credit
monitoring, credit reporting, credit freezes, or other consumer
protections the telecommunications carrier is offering customers
affected by the breach of security.
(b) Commission notification. A telecommunications carrier must
notify the Commission of any breach affecting 5,000 or more customers
no later than seven business days after the carrier reasonably
determines that a breach has occurred and at least three business days
before notification to the affected customers, unless the
telecommunications carrier can reasonably determine that no harm to
customers is reasonably likely to occur as a result of the breach. A
telecommunications carrier must notify the Commission of any breach
affecting fewer than 5,000 customers without unreasonable delay and no
later than thirty (30) calendar days after the carrier reasonably
determines that a breach has occurred, unless the telecommunications
carrier can reasonably determine that no harm to customers is
reasonably likely to occur as a result of the breach. Such notification
shall be made through a central reporting system made available by the
Commission.
(c) Federal law enforcement notification. A telecommunications
carrier must notify the Federal Bureau of Investigation (FBI) and the
U.S. Secret Service (Secret Service) of a breach that affects 5,000 or
more customers no later than seven business days after the carrier
reasonably determines that such a breach has occurred and at least
three business days before notification to the affected customers,
unless the telecommunications carrier can reasonably determine that no
harm to customers is reasonably likely to occur as a result of the
breach. Such notification shall be made through a central reporting
system made available by the Commission.
(d) Recordkeeping. A telecommunications carrier shall maintain a
record, electronically or in some other manner, of any breaches and
notifications made to customers, unless the telecommunications carrier
can reasonably determine that no harm to customers is reasonably likely
to occur as a result of the breach. The record must include the dates
on which the carrier determines that a reportable
[[Page 87346]]
breach has occurred and the dates of customer notification. The record
must include a written copy of all customer notifications. Carriers
shall retain the record for a minimum of two years from the date on
which the carrier determines that a reportable breach has occurred.
Sec. 64.2010 Business customer exemption for provision of
telecommunications services other than BIAS.
Telecommunications carriers may bind themselves contractually to
privacy and data security regimes other than those described in this
subpart for the provision of telecommunications services other than
BIAS to enterprise customers if the carrier's contract with that
customer specifically addresses the issues of transparency, choice,
data security, and data breach and provides a mechanism for the
customer to communicate with the carriers about privacy and data
security concerns.
Sec. 64.2011 BIAS offers conditioned on waiver of privacy rights.
(a) A BIAS provider must not condition, or effectively condition,
provision of BIAS on a customer's agreement to waive privacy rights
guaranteed by law or regulation, including this subpart. A BIAS
provider must not terminate service or otherwise refuse to provide BIAS
as a direct or indirect consequence of a customer's refusal to waive
any such privacy rights.
(b) A BIAS provider that offers a financial incentive, such as
lower monthly rates, in exchange for a customer's approval to use,
disclose, and/or permit access to the customer's proprietary
information must do all of the following:
(1) Provide notice explaining the terms of any financial incentive
program that is clear and conspicuous, and in language that is
comprehensible and not misleading. Such notice must be provided both at
the time the program is offered and at the time a customer elects to
participate in the program. Such notice must:
(i) Explain that the program requires opt-in approval to use,
disclose, and/or permit access to customer PI;
(ii) Include information about what customer PI the provider will
collect, how it will be used, and with what categories of entities it
will be shared and for what purposes;
(iii) Be easily accessible and separate from any other privacy
notifications, including but not limited to any privacy notifications
required by this subpart;
(iv) Be completely translated into a language other than English if
the BIAS provider transacts business with the customer in that
language; and
(v) Provide at least as prominent information to customers about
the equivalent service plan that does not necessitate the use,
disclosure, or access to customer PI beyond that required or permitted
by law or regulation, including under this subpart.
(2) Obtain customer opt-in approval in accordance with Sec.
64.2004(c) for participation in any financial incentive program.
(3) If customer opt-in approval is given, the BIAS provider must
make available a simple, easy-to-use mechanism for customers to
withdraw approval for participation in such financial incentive program
at any time. Such mechanism must be clear and conspicuous, in language
that is comprehensible and not misleading, and must be persistently
available on or through the carrier's Web site; the carrier's
application (app), if it provides one for account management purposes;
and any functional equivalent to the carrier's homepage or app. If a
carrier does not have a Web site, it must provide a persistently
available mechanism by another means such as a toll-free telephone
number.
Sec. 64.2012 Effect on State law.
The rules set forth in this subpart shall preempt any State law
only to the extent that such law is inconsistent with the rules set
forth herein and only if the Commission has affirmatively determined
that the State law is preempted on a case-by-case basis. The Commission
shall not presume that more restrictive State laws are inconsistent
with the rules set forth herein.
[FR Doc. 2016-28006 Filed 12-1-16; 8:45 am]
BILLING CODE 6712-01-P