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Fight breaks out over ‘pay for privacy’ internet plans

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A fight is brewing over the future of internet plans that require customers to pay more to protect their privacy.

Consumer advocates say the so-called pay-for-privacy plans disproportionately harm low-income people and are urging regulators to crack down.

But internet service providers are pushing back. A filing published this week showed that Comcast recently met with federal regulators and defended the legality of the plans.

{mosads}Under the pay-for-privacy arrangements, customers are offered a set price for high-speed internet service. If they agree to have their Web surfing tracked to enable targeted advertisements, though, they can pay a lower fee.

“A bargained-for exchange of information for service is a perfectly acceptable and widely used model throughout the U.S. economy, including the Internet ecosystem, and is consistent with decades of legal precedent and policy goals related to consumer protection and privacy,” Comcast said in the filing, which disclosed a meeting with Federal Communications Commission staffers.

Comcast’s comments are putting a new spotlight on the plans amid concerns that low-income consumers may be forced to make a tradeoff between affordable — and vital — broadband access and their privacy.

“I hope that privacy doesn’t become a luxury item,” said FCC Chairman Wheeler at a press conference on Thursday.

The plans are far from common. AT&T offers a plan to customers in Kansas City, Mo. and Austin, Texas that cost $99 a month if they don’t want to be targeted with ads, but only $70 a month if they consent to the tracking.

Comcast, in fact, doesn’t offer such plans and said in a statement that it had no “current plans” to do so.

But the fight over pay-for-privacy plans is also part of a larger debate over the FCC’s proposed privacy rules for internet providers. The proposal would broadly require customers to give their consent before their data is used for most purposes.

Comcast cited those broad proposed rules to explain their stance on plans that cost more if a customer doesn’t want to see targeted ads.

“While Comcast has no current plans to offer a discount tied to customer willingness to allow data to be used the way it is today by the entire Internet ecosystem, the FCC’s extreme and unprecedented opt-in proposal that is not justified by the record, requires us to consider how to create additional choices that would allow us to compete in this ecosystem and benefit customers,” a spokesperson for the company said.

The FCC is paying attention to the specific issue of pay-for-privacy plans as it works to draft the broad privacy rules and has asked for comments on the impact of such pricing schemes.

“What is the current impact on low income consumers and others of business practices that offer financial inducements in return for customers’ consent to their broadband providers using and sharing confidential information,” the agency asked earlier this year as they began to formally consider the proposed rules.

“What is likely to be the impact if such practices become more wide-spread among broadband providers?”

The commission is expected to take a vote later this year on a final version of the proposed broad privacy rules.

Some consumer groups hope that the FCC will go further and take steps to rein in, or outright ban, plans that offer inducements to be tracked.

They have raised concerns that the plans will force low-income consumers to sacrifice privacy for financial reasons. Some groups say online advertisers have been known to purposefully target people experiencing financial difficulties.

“The FCC should not allow ISPs [internet service providers] to manipulate and coerce consumers into giving up their privacy and should prohibit these problematic arrangements as part of its proceeding to implement privacy protections for internet users,” wrote the Open Technology Institute’s Eric Null on Friday.

Dallas Harris, a policy fellow with Public Knowledge, said the commission should — while not necessarily ban all plans — make sure that it was impossible for providers to take advantage of low-income customers.

“If a consumer sits down and says ‘Man, the only way I can afford this broadband plan is if I give up my privacy rights,’ that’s an issue,” she said.

Internet providers and some advocates, like the Multicultural Media, Telecom and Internet Council, counter that the plans actually give crucial discounts to low-income customers and that a regulatory crackdown would hurt the people advocates say they’re fighting for.

“Banning discounts in exchange for information-sharing would, by definition, increase the price and lower the output of any affected service, including broadband Internet access,” AT&T said in comments to the FCC in May.

“The contemplated ban would thereby disadvantage precisely those low-income populations about whom the [proposed rule] expresses concern.”

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