"The action is going to be in several places. It's going to be at the FTC, at the Department of Commerce and in Brussels," Chester said. "The big invisible player here is the European Union, which is in the process of significantly revising its privacy [framework]," he added.
The EU has historically taken a more rigorous approach toward regulating privacy than have U.S. authorities. Chester suggested that if the new rules under development in Europe raise the bar higher, that will impose additional privacy restrictions on U.S. companies that operate globally, and could inspire domestic regulators to follow the lead of the EU.
"The Europeans could easily become the global standard," he said.
4. Net Neutrality to Get Its Day in Court
Sometimes referred to as the third rail of technology policy, the contentious issue of network neutrality -- the prohibition against Internet service providers blocking or slowing access to specific websites -- will largely turn on the outcome of a legal challenge to the rules the FCC enacted in 2010. The lawsuit, brought by Verizon Communications, rests with the D.C. Circuit Court of Appeals, which has already struck down an FCC order rebuking Comcast for throttling traffic to peer-to-peer service BitTorrent.
After a court threw out Verizon's initial complaint in April on procedural grounds, the telecom giant refiled its lawsuit in September, following the publication of the FCC's net neutrality rules in the Federal Register. The FCC quickly filed a motion to dismiss.
House Republicans, incensed over what they argue is a broad power grab by the FCC that could lead to excessive regulation over all manner of Internet activity, won passage of a bill to repeal the net neutrality rules in April, but that measure is a non-starter in the Democratic-led Senate. This fall, House GOP members called on President Obama, an avowed supporter of net neutrality, to overturn the rules as part of the administration's broader review of federal regulations.
While lawmakers can be expected to continue to make noise about the FCC's action in 2012, it is really the decision of the court that will go a long way toward determining the next stage of the net neutrality debate. Should the agency prevail, its rules prohibiting all service providers from blocking legitimate websites and mandating disclosures about their network management practices will remain in effect. The order also bars fixed wireline providers from unreasonably discriminating against specific sites, though wireless carriers are exempt from that provision.