Fordham Law Review Volume 78 Issue 2 Article 9 2009 Disclosure, Deception, and Deep-Packet Inspection: The Role of the Federal Trade Commission Act's Deceptive Conduct Prohibitions in the Net Neutrality Debate Catherine J. K. Sandoval Follow this and additional works at: https://ir.lawnet.fordham.edu/flr Part of the Law Commons Recommended Citation Catherine J. K. Sandoval, Disclosure, Deception, and Deep-Packet Inspection: The Role of the Federal Trade Commission Act's Deceptive Conduct Prohibitions in the Net Neutrality Debate, 78 Fordham L. Rev. 641 (2009). Available at: https://ir.lawnet.fordham.edu/flr/vol78/iss2/9 This Article is brought to you for free and open access by FLASH: The Fordham Law Archive of Scholarship and History. It has been accepted for inclusion in Fordham Law Review by an authorized editor of FLASH: The Fordham Law Archive of Scholarship and History. For more information, please contact [email protected]. Disclosure, Deception, and Deep-Packet Inspection: The Role of the Federal Trade Commission Act's Deceptive Conduct Prohibitions in the Net Neutrality Debate Cover Page Footnote Thanks to the participants in the Oxford Round Table, Oxford University, particularly Amy Kristin Sanders and T. Barton Carter for their comments about this Article. I appreciate the support of the Santa Clara University School of Law Scholarly Research Grant. Special thanks to Al Hammond, Don Polden, Eric Goldman, Rob Frieden, Phil Weiser, Kevin Werbach, Anthony Varona, Leonard Baynes, Marvin Ammori, James Speta, and Angela Campbell for their comments ont his work. Thanks to the paricipants in the Social Sciences Research Council Academic Conference held in conjunction with the National Media Reform Conference and the participants at conferences and workshops at the American Univerisity School of Law, University of the Pacific McGeorge School of Law, St. John's Law School and the santa Clara University School of Law, where I presented portions of this Ariticle. I am grateful for the excellent research assistance of SCU Law students Eli Edwards, IvyLiu Manley, Krista Jacobsen, Asa Pitman, Michelle Schaefer, Oscar Warren Hunter, Bruce Shem, Jason Chang, Carrie Wooley, and Ravi Mohan. This article is available in Fordham Law Review: https://ir.lawnet.fordham.edu/flr/vol78/iss2/9 ARTICLES DISCLOSURE, DECEPTION, AND DEEP-PACKET INSPECTION: THE ROLE OF THE FEDERAL TRADE COMMISSION ACT'S DECEPTIVE CONDUCT PROHIBITIONS IN THE NET NEUTRALITY DEBATE Catherine . K. Sandoval* This Article examines a largely unexplored frontier in the "Net Neutrality" debate: the Federal Trade Commission (FTC) Act's proscriptionsagainst deceptive conduct as a legal limit on Internet Service Provider (ISP) discrimination against Internet traffic. ISP discrimination against certain types of Internet traffic has blossomed since 2005 when the Federal Communications Commission (FCC), with the Supreme Court's blessing in NCTA v. Brand X and FCC, relieved ISPsfrom common-carrier regulations that prohibited discrimination and reclassified ISPs as "information service providers." This Article argues that the Internet's architecture and codes presumed common carriage, indicating that the Internet's design and industry "self-regulation" cannot alone prevent ISPs who control access to the Internet's physical layer from becoming its gatekeepers. The FTC and FCC must use their respective authority to police the gulf between ISP promises and practices,protect Internet users and competition, and safeguard the Internet itself as a source for innovation and a wide range of speech. * Assistant Professor of Law, Santa Clara University School of Law (SCU Law). Co- Director, Broadband Institute of California. Thanks to the participants in the Oxford Round Table, Oxford University, particularly Amy Kristin Sanders and T. Barton Carter for their comments about this Article. I appreciate the support of the Santa Clara University School of Law Scholarly Research Grant. Special thanks to Al Hammond, Don Polden, Eric Goldman, Rob Frieden, Phil Weiser, Kevin Werbach, Anthony Varona, Leonard Baynes, Marvin Ammori, James Speta, and Angela Campbell for their comments on this work. Thanks to the participants in the Social Sciences Research Council Academic Conference held in conjunction with the National Media Reform Conference, and the participants at conferences and workshops at the American University School of Law, University of the Pacific McGeorge School of Law, St. John's Law School, and the Santa Clara University School of Law, where I presented portions of this Article. I am grateful for the excellent research assistance of SCU Law students Eli Edwards, Ivy Liu Manley, Krista Jacobsen, Asa Pitman, Michelle Schaefer, Oscar Warren Hunter, Bruce Shem, Jason Chang, Carrie Wooley, and Ravi Mohan. FORDHAMLA WREVIEW [Vol. 78 In August 2008 the FCC condemned cable-based ISP Comcast's actions that interfered with subscriber use of peer-to-peer Internet protocols to legally sharefiles and access Internet content, practices that contradicted Comcast's offer of unfettered Internet access. While that order is being appealed and the FCC considers formal adoption of net neutrality principles,this Article examines Comcast's actions in light of the FTCAct's deceptive practices standards. It also analyzes the market promises and terms of service of other cable, wireline, wireless, and satellite-basedISPs to examine industry practices that limit consumer choice and competition. To protect Internet users and the Internet itself as a platform for competition and new voices, the FCC should determine whether those practices violate the Communications Act. This Article also recommends that the FTC declare that ISP advertisements of unlimited data or Internet access violate the FTC Act's deceptive conduct provisions when the ISP's material limits on Internet use are not prominently highlighted in the ISP's enticements to subscribers. TABLE OF CONTENTS I. INTRODUCTION: FEDERAL TRADE COMMISSION ACT PROSCRIPTIONS OF DECEPTIVE PRACTICES AS A RESTRAINT ON INTERNET SERVICE PROVIDER CONTROL OF INTERNET ACCESS .................................................... 643 II. FROM COMMON CARRIAGE TO INFORMATION SERVICE PROVIDERS: THE FOUNDATION FOR NETWORK NON- NEUTRALITY AND FTC JURISDICTION OVER INTERNET SERVICE PROVIDERS ..................................................... 652 III. THE LEGAL STANDARDS FOR AN FTC ACT DECEPTIVE PRACTICES CLAIM EXAMINING INTERNET SERVICE PROVIDER PROMISES AND NETWORK MANAGEMENT PRACTICES ................................... 661 A. FTC Act Deceptive PracticesClaim: False Material R ep resentation ........................................................................ 664 B. FTC Act Deceptive Practices Claim: RepresentationMust Mislead Consumers Acting Reasonably Under the Circum stances ......................................................................... 665 C. Defenses to an FTC Act Deceptive Practices Claim: Disclaimers,Disclosure, and Reasonable Consum er A ction ..................................................................... 666 1. Disclosure: Were Comcast's Disclosures Sufficient to Alert Users to the Material Limits on Internet Service? .............................. .. .. .. .. .. .. 666 2. Were Comcast's Actions Deceptive in Light of Its Promised Services and Limited Disclosures? ......... .. .. 673 D. FTC Act Deceptive Practices Claim: Alleged Benefits of Conduct Not a Defense ........................................................... 684 2009] FTC AND NET NEUTRALITY E. FTC Act Deceptive PracticesClaim.- PrivateAgreements with Application Providers and Changes in the Congestion Management System Do Not Resolve the FTC Act Issues ......685 IV. CAN BETTER ISP DISCLOSURE SUFFICIENTLY PROTECT INTERNET CONSUMERS AND COMPETITION IN LIEU OF FTC AND FCC ENFORCEM EN T? .............................................................................693 V. QUALIFIED REFUSALS TO DEAL, UNFAIR COMPETITION, ANTITRUST AND FTC ACT DECEPTIVE CONDUCT STANDARDS ....701 VI. FTC ACT DECEPTIVE PRACTICES CLAIM: PROPOSAL FOR INJUNCTIVE RELIEF AND EQUITABLE REMEDIES To REDRESS DECEPTIVE ISP NETWORK MANAGEMENT C O N D U CT ................................................................................706 V II. C ON CLU SION .....................................................................................710 I. INTRODUCTION: FEDERAL TRADE COMMISSION ACT PROSCRIPTIONS OF DECEPTIVE PRACTICES AS A RESTRAINT ON INTERNET SERVICE PROVIDER CONTROL OF INTERNET ACCESS "When I use a word," Humpty Dumpty said. "itmeans just what I 1 choose it to mean-neither more nor less." Where does unfettered mean restricted and unlimited mean limited? Not in Wonderland but in the Internet domain, according to several Internet Service Providers (ISPs). ISPs such as Comcast, AT&T, and Verizon promised subscribers "unfettered" or "unlimited" Internet access. 2 Yet, those same ISPs restricted Internet access through vague contractual prohibitions and fine print separated from broad promises of Internet access. 3 The Federal Communications Commission (FCC) found in 2008 1. LEWIS CARROLL, THROUGH THE LOOKING GLASS 106 (Schocken Books 1987) (1872). 2. See INTERNET BUREAU, ATT'Y GEN. OF THE STATE OF N.Y., IN THE MATTER OF VERIZON WIRELESS: ASSURANCE OF DISCONTINUANCE (2007) [hereinafter VERIZON ASSURANCE OF DISCONTINUANCE], available at http://www.oag.state.ny.us/ media center/2007/oct/Verizon%2OWireless%20AOD.pdf (requiring that Verizon cease advertisements describing its Data Access Plan as "unlimited"