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Broadband Providers Will Need Permission to Collect Private Data Broadband Providers Will Need Permission to Collect Private Data
(about 3 hours later)
WASHINGTON — Federal officials on Thursday approved privacy rules that will curb the ability of broadband providers to collect data about users, dealing a blow to AT&T, Verizon Communications and others that rely on such information for their advertising businesses. WASHINGTON — Federal officials approved broad new privacy rules on Thursday that prevent companies like AT&T and Comcast from collecting and giving out digital information about individuals — such as the websites they visited and the apps they used — in a move that creates landmark protections for internet users.
The new privacy rules approved by the Federal Communications Commission require broadband providers to get permission to collect data on a subscriber’s web browsing, app use, location and financial information. Currently, broadband providers can track users unless those individuals tell them to stop. By a 3-to-2 vote, the Federal Communications Commission clearly took the side of consumers. The new rules require broadband providers to obtain permission from subscribers to gather and give out data on their web browsing, app use, location and financial information. Currently, broadband providers can track users unless those individuals tell them to stop.
The F.C.C. said the rules, approved in a three-to-two vote along party lines, were necessary to protect internet users who want more control over how companies treat their private information. The agency said it created the rules after it reclassified broadband last year into a service like a utility, a move that required broadband to have privacy rules similar to those imposed on phone companies. It was the first time the F.C.C. has passed such online protections. The agency made privacy rules for phones and cable television in the past, but high-speed internet providers, including AT&T and Verizon Communications, were not held to any privacy restrictions, even though those behemoth companies have arguably one of the most expansive views of the habits of web users.
“There is a basic truth: It is the consumer’s information. It is not the information of the network the consumer hires to deliver that information. What this item does is to say that the consumer has the right to make a decision about how her or his information is used,” said Tom Wheeler, the chairman of the F.C.C. The passage of the rules deal a blow to telecommunications and cable companies like AT&T and Comcast, which rely on such user data to serve sophisticated targeted advertising. The fallout may affect AT&T’s $85.4 billion bid for Time Warner, which was announced last week, because one of the stated ambitions of the blockbuster deal was to combine resources to move more forcefully into targeted advertising.
The decision hurts companies, including Comcast, Verizon and AT&T, that rely on user data to create profiles on subscribers for ads tailored to an individual’s preferences. “There is a basic truth: It is the consumer’s information,” Tom Wheeler, the chairman of the F.C.C., said of the necessity of protecting internet users who want more control over how companies treat their private information. “It is not the information of the network the consumer hires to deliver that information.”
It also takes some air out of the goals of AT&T’s $85.4 billion bid for Time Warner, even before the ink on that deal has dried. The companies said they wanted to combine resources to move more forcefully into targeted advertising. Crucial to that ambition is information about AT&T’s wireless and home broadband users, combined with Time Warner’s viewer data and its huge audience. That would help the merged companies serve up, say, a tailored promotion for Gap Kids in downtown Atlanta. Privacy groups applauded the new rules, which they said brought the United States more in line with European nations that have moved aggressively to protect their citizens’ online privacy.
AT&T, which has criticized the privacy regulations, said it was reviewing details of the final rules. It would not comment on how the rules would affect the proposed merger with Time Warner. “For the first time, the public will be guaranteed that when they use broadband to connect to the internet, whether on a mobile device or personal computer, they will have the ability to decide whether and how much of their information can be gathered,” said Jeffrey Chester, executive director of the Center for Digital Democracy.
In a call with investors on Monday, AT&T’s chief financial officer, John Stephens, said that the vast amount of data available from the combined company would allow “a greater value proposition to offer advertisers.” The outcry from industries that depend on online user data was also swift. Cable lobbying groups called the rules a result of “regulatory opportunism,” while the Association of National Advertisers labeled the regulations “unprecedented, misguided, counterproductive, and potentially extremely harmful.”
Broadband providers said the rules went much further than phone privacy rules and unfairly put them at a disadvantage to web companies like Google and Facebook, which do not have to follow similar privacy regulations but increasingly challenge their businesses. Even with the new rules, online privacy remains tricky. Many people have been lackadaisical about what information they give up online when they register for websites or digital services. The convenience of free services like maps also appeals to people, even though they give companies access to personal information. And some people unknowingly forgo their privacy when allowing apps or other services to track their location or follow their browsing across websites.
AT&T, Verizon and Comcast have acquired media companies in recent years with an eye toward targeted advertising. The F.C.C. rules apply only to their broadband businesses, which would mean data from the habits of AT&T’s wireless and home broadband customers would be subject to the regulations, but not data about AT&T’s DirecTV users or users of the HBO Now app, for example. The F.C.C. rules also have their limits. Online ad juggernauts including Google, Facebook and other web companies are not subject to the new regulations. Those companies are instead required to follow general consumer protection rules enforced by the Federal Trade Commission. That means Google does not have to explicitly ask people permission first to gather web browsing habits, for example.
If the AT&T-Time Warner merger was approved, they would still have many ways to collect data about users and could even buy information from data brokers. AT&T, Verizon and Comcast will also still be able to gather consumers’ digital data, though not as easily as before. The F.C.C. rules apply only to their broadband businesses, which would mean data from the habits of AT&T’s wireless and home broadband customers would be subject to the regulations, but not data about AT&T’s DirecTV users or users of the HBO Now app, for example.
“It could dampen some of the companies’ ambitious joint advertising plans. But I doubt even really tough rules would fundamentally change the business rationale of the deal,” said Paul Gallant, an analyst at Cowen & Company. The companies also have other ways to collect information about people, including the purchase of data from brokers.
The privacy rules are among a set of last-ditch moves by Mr. Wheeler to make the F.C.C. a stronger watchdog over the broadband industry. Those efforts, including the opening of the cable box market aimed at promoting streaming videos, have stirred up a powerful and expensive defense by the broadband industry. AT&T, which has criticized the privacy regulations for internet service providers, would not comment on how the rules would affect its proposed purchase of Time Warner. But it emphasized the benefits of ads that allow for free and cheaper web services.
“At the end of the day, consumers desire services which shift costs away from them and toward advertisers,” said Robert W. Quinn Jr., AT&T’s senior executive vice president of external and legislative affairs. “We will look at the specifics of today’s action, but it would appear on its face to inhibit that shift of lower costs for consumers by imposing a different set of rules on” internet service providers.
Comcast said that the rules were not needed and that the F.C.C. did not prove that broadband providers were hurting consumers.
For over two decades, internet service providers “and all other internet companies have operated under the F.T.C.’s privacy regime and, during that time, the internet thrived, consumer privacy was protected,” said David L. Cohen, Comcast’s senior executive vice president.
The new rules are among a set of last-ditch moves by Mr. Wheeler to make the F.C.C. a stronger watchdog over the broadband industry. Since he was appointed F.C.C. chairman in 2013, he has tried to open the cable box market in an effort to promote streaming videos, among other moves. Mr. Wheeler is entering what are probably the last few months of his tenure at the agency, as he is not expected to be reappointed by whoever becomes the next president.
The F.C.C. proposed the broadband privacy rules in March. That followed the reclassification of broadband last year into a utilitylike service, a move that required broadband to have privacy rules similar to those imposed on phone companies.
Once the rules were proposed, the F.C.C. immediately faced a backlash. Cable and telecom companies created a lobbying group called the 21st Century Privacy Coalition to fight off the regulations. The group is led by Washington heavyweights such as Jon Leibowitz, the former chairman of the F.T.C., and former Representative Mary Bono Mack, Republican of California. Henry A. Waxman, former chairman of the House Energy & Commerce Committee and a Democrat, was also hired by the 21st Century Privacy Coalition and wrote an op-ed article in The Hill to protest the rules.
Even some web companies protested the proposed rules. Google said in comments filed to the F.C.C. this month that the regulations should not include web browsing, because that does not necessarily include sensitive personal information.
“Consumers benefit from responsible online advertising, individualized content, and product improvements based on browsing information,” wrote Austin Schlick, Google’s director of communications law.
In the end, the objections had little effect on the F.C.C.
“Hopefully, this is the end of what has been the race to the bottom for online privacy, and hopefully the beginning of a race to the top,” said Harold Feld, senior vice president at Public Knowledge, a nonprofit public interest group.“Hopefully, this is the end of what has been the race to the bottom for online privacy, and hopefully the beginning of a race to the top,” said Harold Feld, senior vice president at Public Knowledge, a nonprofit public interest group.