Commentary

Wireless Carriers Press FCC To Allow 'Pay-For-Privacy' Schemes

CTIA, the trade group for the wireless industry, is joining Comcast in urging the Federal Communications Commission to allow "pay-for-privacy" broadband pricing schemes.

"Allowing consumers a variety of options regarding whether to receive a discount on broadband service in exchange for personalized advertising should be preserved," the CTIA says in a new FCC filing.

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 requested comments about that proposal, regulators also sought input about methods for obtaining consent, including whether providers should be able to charge consumers higher fees to avoid online tracking.

AT&T already does so in Austin and Kansas City. U-Verse customers in those cities who agree to accept AT&T's “Internet Preferences” ad-targeting program 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. (With taxes and fees, the price difference reportedly is as high as $66 a month.)

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A group of Democratic lawmakers recently urged the FCC to prohibit that type of "pay-for-privacy" billing, arguing it's "counter to our nation's core principle that all Americans have a fundamental right to privacy." The lawmakers added that those pricing models "may disproportionately harm low-income customers, the elderly, and other vulnerable populations."

The CTIA counters in its latest filing that pay-for-privacy models -- which the group refers to as "hybrid payment models" -- are nothing new.

"Hybrid payment models have been in commerce for centuries, including advertising supported magazines, grocery store loyalty programs, and app-based discount programs for retail establishments," the CTIA writes in its most recent filing, which summarizes arguments it made during two meetings this week with FTC officials.

The group goes on to compare broadband carriers' pay-for-privacy plans to business models of companies like Google and Facebook. "Many internet companies rely on use of consumer data as their sole source of income, like search engines and social networks," the CTIA writes. "Such offerings can lead to significant cost savings for all consumers, enable more valuable services for consumers, and mirror much of the economic activity that consumers expect."

But, as FCC Chairman Wheeler and privacy advocates have said for months, broadband carriers aren't equivalent to Google, Bing, LinkedIn or Facebook.

For one thing, most people have choices about Web sites to visit or which services to use, but limited options for broadband access.

Also, most people already have tools at their disposal to prevent their information from being collected by Web sites. For instance, people can tweak their browser settings to prevent ad networks and other companies from setting third-party cookies; doing so blocks many forms of online data collection. But prevent tracking by broadband providers is technologically harder.

Another key difference between broadband providers and Web services companies is that only broadband providers have a view into all unencrypted traffic -- including visits to non-commercial sites.

The FCC hasn't yet set a date for voting on the proposed privacy rules, but that could happen very soon.

Wheeler said this week that the agency is progressing with a variety of initiatives, including "protecting consumer privacy rights for network-generated information."

He added that the FCC intends to complete its work on broadband privacy by the end of the year.

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