Federal regulators have approved new broadband privacy rules that make internet service providers like Comcast and Verizon ask customers' permission before using or sharing much of their data, potentially making it more difficult for them to grow advertising businesses.
Under the measure, for example, a broadband provider has to ask a customer's permission before it can tell an advertiser exactly where that customer is by tracking her phone and what interests she has gleaned from the websites she's visited on it and the apps she's used.
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For some information that's not considered as private, like names and addresses, there's a more lenient approach. Customers should assume that broadband providers can use that information, but they can "opt-out" of letting them do so.
The Federal Communications Commission's measure was scaled back from an earlier proposal, but was still criticized by the advertising, telecommunications and cable industries.
Cable and phone companies want to increase revenue from ad businesses of their own — AT&T has said increasing advertising tailored to customers' preferences is one of its goals with its $85.4 billion purchase of HBO, CNN and TBS owner Time Warner; Verizon has bought AOL and agreed to buy Yahoo in order to build up a digital-ad business.
But the new rules could make doing that more difficult. Companies and industry groups say it's confusing and unfair that the regulations are stricter than the Federal Trade Commission standards that digital-advertising behemoths such as Google and Facebook operate under. The FCC does not regulate such web companies.
FCC officials approved the rules on a 3-2 vote Thursday, its latest contentious measure to pass on party lines.
"It is the consumer's information. How it is to be used should be the consumers' choice, not the choice of some corporate algorithm," said Tom Wheeler, the Democratic chairman of the FCC who has pushed for the privacy measure and other efforts that have angered phone and cable companies. AT&T and other players have fought the "net neutrality" rules, which went into effect last year, that say ISPs can't favor their some internet traffic. Another measure that could make the cable-box market more competitive is still waiting for an FCC vote.
One of the Republican commissioners who voted against the privacy rules, Michael O'Reilly, said that they were senseless because broadband providers could still buy the information they would have collected, and that the prices consumers ultimately pay could rise.
Industry groups representing the cable, phone and advertising industries criticized the outcome of Thursday's vote, while several consumer-advocacy groups hailed it.