AT&T, predictably hysterical over the Federal Communication Commission's privacy proposal, claimed in its comments to the FCC that an opt-in system would destroy its ability to “subsidize affordable consumer services by using customer data to engage in profitable first- and third-party marketing.”
There are a couple of things to unpack in there. First, what AT&T is objecting to is having to ask consumers whether they want their data shared. To the extent that what AT&T is offering here is a service to the consumer, they can ask. What AT&T is afraid of is that their consumers will say “no.” So, in essence, AT&T’s complaint is that if consumers were sufficiently aware of what they were doing, they would elect not to let them do it.
Second, what does AT&T mean when it says it needs to subsidize broadband, given the AT&T claims it needs data as a way to “subsidize” consumer broadband. That can mean one of two things. The more obvious option is that AT&T doesn’t think you are actually paying enough right now, and so it’s selling your data to make up the difference. Given that it made around $13 billion in net profits in 2015 — over a 100% increase from its $6 billion of profits in 2014 — it’s a little hard to believe that AT&T is losing money on its broadband subscribers. As illustrated by this snippet from the AT&T 2015 annual report:
“Operating revenues increased $13,061, or 58.7%, in 2015 and $691, or 3.2%, in 2014. Our July 2015 acquisition of DIRECTV was largely responsible for higher revenues beginning in the third quarter of 2015. Also contributing to the increases was continued strong growth in consumer IP broadband and U-verse video, which more than offset lower revenues from legacy voice and data products.”
So it clearly is not the case that consumer broadband is sucking the company dry, and AT&T just needs a way to make up the money it is losing. ISPs have cried wolf before, falsely claiming that net neutrality would depress investment in broadband rollout. The much more likely reason for AT&T’s objection is that it believes that it has the right to milk additional revenue out of its customers, by using a practice that AT&T would prefer not to explain in detail.
Alternatively, AT&T may be talking about its offering discounts to users that agree to having their information collected, packaged, and sold. While Public Knowledge acknowledges this could work in theory, it also raises grave concerns — particularly given the lack of choice that most people have for broadband provider.
On one hand, it is a least possible to imagine situations where customers would willingly trade their information for a genuine discount linked to the value of the information collected. On the other hand, if a low-income family must choose between agreeing to the harvesting of their data and paying a coercively high premium on their service, or living without broadband connectivity, that would clearly be exploitative. It’s not hard to see how this practice could lead to redlined, “privacy-free zones” in low-income areas, where privacy-conscious broadband is deliberately priced out of reach for residents in order to keep the ISP’s data revenue streams open.
As for the (exhausting) cries of “but Google and Facebook harness data to provide free services all the time!”: the key word there is free. ISPs not only collect, market, and profit off of customer data, but they do it while charging customers for the privilege. If that prospect disturbs you, well, you are not alone.