• by Wendy Davis , Staff Writer @wendyndavis, August 9, 2016

The Federal Communications Commission hasn't yet taken a position on whether broadband providers should be able to charge consumers higher monthly rates to avoid online behavioral targeting.

But Chairman Tom Wheeler some privacy advocates reason to hope he's not a fan of the pay-for-privacy concept. "I would hope that privacy doesn't become a luxury item," he said late last week, while speaking with reporters after the FCC's most recent monthly meeting. His comment, while vague, and hardly a binding promise, is noteworthy if only because it highlights one of the same concerns raised by consumer groups that oppose the pay-for-privacy pricing model pioneered by AT&T.

Since 2013, AT&T has charged some U-Verse subscribers higher fees to avoid online behavioral targeting. Last year, the company extended that model to Kansas City, where it rolled out a 1-GB fiber network.

Customers in those locales who agree to AT&T's ad targeting program, “Internet Preferences,” can purchase 1-GB service for $70 a month. Customers who don't want to participate in Internet Preferences are charged $99 a month for the same service. (After taxes and fees, the price difference reportedly ranges from $42 to $66.)

The agency could soon issue new broadband regulations that would affect broadband providers' ability to charge a premium for privacy. The proposed rules would require broadband providers to obtain consumers' opt-in consent before tracking them for ad purposes. When regulators sought public comment about the proposal, they posed questions about whether providers should be able to charge consumers higher fees to avoid online tracking.

Comcast recently met with officials at the FCC and asked them to allow broadband providers to continue to charge more to consumers who don't want to be tracked for ad purposes.

Late last week, New America's Open Technology Institute publicly responded to Comcast's request by arguing pay-for-privacy will harm consumers.

"Consumers generally lack competitive choices for internet service, meaning pricing plan options are limited to those offered by the high-speed internet provider in that area," the group writes in a blog post.

The organization discussed a scenario where an ISP charged people $25 more each month to avoid behavioral targeting. "Stuck with that one provider, a consumer may not be able to justify spending an extra $25 per month to prevent the ISP from using and selling privacy-invasive data," the group says. "This kind of coercion is the precise design of pay-for-privacy schemes: charge consumers a hefty premium, untethered to the actual value of the data, to protect their privacy so they will have a difficult time justifying the additional cost."

The Open Technology Institute adds that customers without much extra money are especially likely to feel the impact of premium pricing for privacy. "Low-income consumers have less disposable income with which to pay for privacy-protectiive plans, and therefore are much more likely to give up their privacy in exchange for access to the Internet," the group writes. "Low-income consumers should not have to decide between internet access and privacy, but pay-for-privacy forces that decision upon them."