FCC Urged To Ban Premium Pricing For Privacy

Internet service providers shouldn't be allowed to charge consumers higher prices to avoid having their Web activity tracked for ad purposes. That's according to Massachusetts Senator Elizabeth Warren, fast-rising star in the Democratic Party.

"Privacy is not a luxury good reserved only for the wealthy," Warren writes this week in a letter to the Federal Communications Commission.

She is urging the FCC to "ban unreasonable practices that coerce low income consumers into giving up their privacy in return for access to basic internet services."

Warren's letter comes as the FCC is considering issuing tough broadband privacy rules that would require broadband providers' to obtain consumers' opt-in consent before tracking them for ad purposes. When the agency issued its requests for comments about that proposal, regulators also sought comments about methods for obtaining consent, including whether providers should be able to charge consumers higher fees to avoid online tracking.



Last year, AT&T Senior Vice President Robert Quinn defended the company's pricing model by suggesting it has to charge a premium in order to compete with Google, which offers 1 GB fiber service in Austin, Kansas City and other neighborhoods.

“We have to be able to compete with people who are subsidizing their services with advertising revenue,” he said last year at an FCC workshop on broadband privacy.

Google doesn't use deep-packet inspection to collect Web-surfing information from its broadband subscribers in order to serve them ads. But the company obviously garners a great deal of online ad revenue.

In her letter, Warren specifically criticizes AT&T's decision to charge Gigabit consumers higher fees to avoid the company's online behavioral advertising program -- which involves tracking their online activity in order to serve them tailored ads.

When AT&T rolled out its 1-GB fiber network in Kansas City last year, the company said the price of subscriptions to its network will depend on consumers' willingness to be tracked for ad-targeting purposes.

People who accept AT&T's ad targeting -- which the company calls the “Internet Preferences” program -- can purchase 1-GB service for $70 a month. People who don't want to participate in Internet Preferences will be charged $99 a month for the same 1-GB service. (After factoring in taxes and fees, the pricing differential reportedly ranges from $42 to $66.)

The company uses a similar pricing model in Austin, where it has operated a high-speed U-verse network since late 2013.

"The FCC is right to be concerned about a service that requires consumers to pay hundreds of dollars extra each year so that their ... provider does not collect and sell information on the Web sites they visit, the ads they see, and the terms they enter into search engines," Warren writes.

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