Wild Wild Web Needs Some Broadband Regulation

The wild, wild Web is about to be tamed.



Left to their own devices, the Internet and the developing broadband universe are being shaped by capitalist forces doing what comes naturally: Finding ways to make money and grow market share. That's all well and good, until someone gets hurt.

Regulators haphazardly put their stamp on the process during reviews and conditional approvals of mergers and acquisitions.

Promised broadband regulation has taken a back seat to financial, environmental, international and political crises dominating Washington. The Obama administration has been distracted in its intent to shape and advance the burgeoning broadband backbone of global media, communications, advertising and commerce. The Federal Communications Commission's National Broadband Plan is long way from fruition.

Spotty attention to the greatest universal force for change won't do when individuals and companies are poised to experience irreparable harm.

While no one wants heavy-handed government intervention, several recent developments underscore the need for broad checks and balances to assure consumer protections and a fair, level business playing field.

Facebook's new Open Graph instant personalization platform already has elicited calls by Sen. Charles Schumer (D-NY) and others in Congress. They want the Federal Trade Commission to develop guidelines on how the leading social network can use the resulting information in order to protect member privacy.

In the weekssince Open Graph was simultaneously announced and launched, untold number of Facebook's nearly 500 million users have been enticed to share their favorite Web sites and virtual footprints with friends. Users must opt-out of the new functionality, which means they have to understand the ramifications of using it. In the meantime, Facebook has access to a personal preference treasure trove to generate long-sought ad revenues.

The Electronic Frontier Foundation is making the case that legislators and consumers should not be surprised by this bold development; Facebook has been steadily compromising user privacy and personal information over the past five years. It has constructed a timeline of Facebook's eroding privacy policy since 2005, when it "earned its core base of users by offering them simple and powerful controls over their personal information."  Facebook has since "helped itself -- and its advertising and business partners -- to users' information, while limiting their options to control their own information," the EFF says.

That breach has included Facebook's failed Beacon experiment, which instantly revealed users' online purchases under the guise of friend shopping recommendations.

Legislators and regulatory agencies eventually can make Facebook an example to other ambitious Internet vendors by imposing heavy fines, stern rebukes and corrective actions. Such moves will come too late for consumers already revealing more than they intended about themselves to the Web's black hole without a way to get it back.

Another area where interactivity is about to go haywire is advertising and commerce, thus far shaped by the driven enterprise of Google, Amazon and Ebay.Apple CEO Steve Jobs recently explained how the company isentering the frayin a manner that could send interactive mobile advertising spiraling out of control.

Now that Apple has enticed Madison Avenue and Hollywood with its new iPad, it is charging companies as much as a $1 million premium to be a first adopter of its new iAd platform, promising 1 billion ad opportunities daily on 100 million devices.  Marketers will shell out a $10 cost-per-thousand and a $2 fee for every consumer interaction with their ad, while forfeiting creative autonomy.  Apple keeps 40% of advertising returns for managing every aspect of the experience.

"Apple is reinventing mobile ad pricing -- and not in a good way," Advertising Age observes. "They are essentially double-dipping by simultaneously charging a rate for 1,000 impressions (CPM) and a rate for click-throughs (CPC). That's different from other mobile ad networks that usually charge for one or the other, but not both."

The competitive response from Google, which dominates online advertising and is bucking to do the same in mobile, is heightening the Madison Avenue scramble for dollars. Nothing and no one is stopping these tech giants from using their clout to adverselydisrupt the murky status quo. Companies ravaged by recession and technological change, will be signing on to new business models for fear of being left behind. Not all of the organic change will be detrimental, but some companies don't have the financial wherewithal to take unregulated business risks.

Before innovative disruption causes too much irreversible destruction, regulators need to establish just enough broadband rules of play to protect consumers and companies venturing into the new frontier without a safety net.

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