By Jack Marshall
What if your telecom company tracked the websites you visit, the
apps you use, the TV shows you watch, the stores you shop at and
the restaurants you eat at, and then sold that information to
advertisers?
In theory, it's possible, given the stance Washington is taking
on online privacy.
Lawmakers on Tuesday voted to overturn privacy rules that
required telecom companies to get customers' permission before
sharing their web-browsing and app usage history with third
parties. The White House said Wednesday President Donald Trump
intends to sign the measure into law.
Undoing the rules, which had been adopted last fall by the
Federal Communications Commission but hadn't gone into effect, is a
boon to Verizon Communications Inc., Comcast Corp. and AT&T
Inc., which are all in the process of building data-driven digital
ad businesses to complement the broadband, wireless and TV services
they offer.
The telecom providers had argued the rules put them at a
competitive disadvantage to online ad giants Google and Facebook,
which generally aren't regulated by the FCC.
Google and Facebook have built huge businesses powered by reams
of data they collect about consumers' online actions, both on their
own properties and across the web. That trove of information
largely explains their dominance -- combined, they have a roughly
47% share of the global digital ad market, according to
eMarketer.
But online advertising executives say telecom providers
potentially have access to more powerful data than the two tech
powerhouses. Their networks -- both wired and wireless -- could
give them a window into nearly everything a user is doing on the
web.
"ISPs like Verizon can now start building and selling profiles
about consumers that include their friends, the news articles they
read, where they shop, where they bank, along with their physical
location," said Jason Kint, chief executive of digital media trade
body Digital Content Next and a vocal proponent of the rules that
Congress voted to repeal.
Though the FCC rules never went into effect, the measure
Congress has approved would give telecom companies far more comfort
that they can construct detailed profiles of their customers'
behaviors and tastes and share that information with marketers
without being punished by regulators.
For example, a wireless provider might track which websites and
apps a consumer uses, in addition to their location, and use that
information to help determine which products they're likely to
purchase.
If a consumer uses the same telecom provider for wireless,
broadband and TV service, the provider could, in theory, track the
majority of that consumer's online behavior and media
consumption.
Now, just because telecom operators won't be shackled doesn't
mean they'll gather and sell every bit of information they have
access to. Consumers who already find targeted ads creepy -- like
the kind from retailers that follow you around after you've visited
their site -- might not take kindly to their telecom company
tracking their every move.
"They could conceivably sell to the highest bidder someone's
browsing history, but it's not clear that that would fly as a
business model," said Kevin Werbach, a professor at the University
of Pennsylvania's Wharton School.
In January, major ISPs agreed to abide by a set of voluntary
privacy principles which stated they will give broadband customers
"opt-in consent for the use and sharing of sensitive information as
defined by the FTC", and "a clear, comprehensible, accurate, and
continuously available privacy notice that describes the customer
information we collect, how we will use that information, and when
we will share that information with third parties."
Jonathan Spalter, chief executive of USTelecom, a trade body
representing broadband service providers, said in a statement that
Congress's action "is another step to remove unnecessary rules and
regulations that handicap economic growth and innovation, and moves
the country one step closer to ensuring that consumers' private
information is protected uniformly across the entire internet
ecosystem."
Consumers who are unhappy with how broadband companies collect
data have few options if they want to switch providers.
"Internet service providers are a distinctly severe threat to
consumer privacy because we have little choice about whether to use
them or not," said Peter Eckersley, chief computer scientist at
privacy advocacy group, Electronic Frontier Foundation. "If you're
in a small American town with only one ISP you have literally no
choice but to use it."
Verizon acquired AOL for $4.4 billion in June 2015 and AOL's
chief executive has pitched marketers on the idea of using
Verizon's data and AOL's technology to help show highly-targeted
ads to consumers. One idea, for example, is to use location data to
test the effectiveness of ads -- determining how many people who
saw an ad for, say, a hotel, subsequently went to that hotel.
In an emailed statement, a Verizon spokesman said "Verizon is
fully committed to the privacy of its customers. Any elimination of
the current FCC privacy rules will not change that commitment."
For its part, AT&T has suggested its proposed $85.4 billion
acquisition of Time Warner Inc. could result in its data being used
to help target TV advertising, offering competition to Google and
Facebook as a result.
AT&T's defunct Internet Preferences program collected
web-browsing data from some home broadband customers and charged
subscribers who wished to opt out of collection an additional $29 a
month. But the carrier said in September it was ending both the
data-gathering and the fee levied to avoid it.
AT&T declined to comment.
Drew FitzGerald contributed to this article.
Write to Jack Marshall at Jack.Marshall@wsj.com
(END) Dow Jones Newswires
March 30, 2017 06:44 ET (10:44 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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