Commentary

AT&T: Tough Privacy Rules May Result In Higher Broadband Prices

In its latest argument against tough new privacy rules, AT&T warns that a proposal prohibiting it from tracking consumers for ad purposes without their permission could lead to higher broadband prices.

"The market price of broadband service depends in part on what collateral revenues an ISP can earn: either revenues for additional services by the ISP or its affiliates or revenues from third-party advertising," AT&T says in a 15-page presentation recently submitted to the FCC. "Any consent requirement that hamstrings an ISP’s efforts to pursue either type of collateral revenues will impose upward pressure on broadband prices and diminish broadband adoption."

AT&T's filing marks its latest attempt to fight FCC Chairman Tom Wheeler's proposal that broadband providers obtain people's opt-in consent before using their Web activity for ad purposes. The rules would only apply to Internet service providers, and not companies that offer Web content or services -- like Google, Facebook, Netflix and ad networks.

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AT&T also argues that the proposal would benefit Google and Facebook at the expense of broadband providers. "The proposed marketing restrictions would irrationally protect market incumbents (e.g., Google and Facebook) against competition from new entrants (ISPs) in the digital advertising market," AT&T says in a 15-page presentation recently submitted to the Federal Communications Commission.

The telecom, like other providers, says it shouldn't have to follow tougher privacy rules than companies like Google. But privacy advocates argue that ISPs should be subject to tough privacy rules because they have a comprehensive view of people's Web activity. Supporters also argue that consumers have limited options for broadband services, but a vast array of choices about which sites to visit.

AT&T insists in its recent presentation that it doesn't have any "unique insight" into consumers' online behavior. "ISPs have an increasingly obstructed view of online activity," the company says, citing research about the growth of encryption technology. "In contrast, large non-ISP platform providers (e.g., Android, Chrome, Facebook) have the best seats in the house."

But others disagree with that opinion. Privacy scholar Paul Ohm recently told the FCC that broadband providers can track people by observing the domain names of sites visited, even if those sites are encrypted. And the consultancy Upturn reported that 85% of the top 50 sites in health, news, and shopping don't fully support encryption.

The FCC has called for final comments on the proposal by Wednesday.

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