Internet Providers OK Ad Opt-In Plan

Published December 1, 2008

Telecommunication giants Verizon, AT&T, and TimeWarner Cable announced their support of an opt-in plan for targeted online advertising, a decision that has been met with praise by legislators and puzzlement by industry experts.

Many tech industry watchers did not expect the big Internet service providers to give up so quickly on a potential revenue-generating policy—so-called behavioral advertising or “deep-packet inspection”—under pressure from Congress and privacy watchdog groups.

Nevertheless, the biggest telecom companies are poised to let consumers opt in to advertising targeted toward them based on sites they visit on the Internet, as opposed to making the feature passive—meaning Web users would have to actively choose to reject deep-packet inspection.

Congress Stepped In

“Deep-packet inspection has come under heavy scrutiny by Congress,” said Peter Swire, a law professor at Ohio State University and senior fellow at the Washington, DC-based Center for American Progress, a liberal think tank. “For consumers with a broadband connection, there is no easy defense against deep-packet inspections. It is very intrusive, and the phone companies are responding to that with the opt-in plan.

“When it comes to a Web site or search engine, consumers can decide to go elsewhere,” Swire said. “But when they only have one Internet connection, it’s hard for consumers to avoid that kind of surveillance.”

Privacy Concerns Questioned

But some experts say the privacy concerns of deep-packet inspection and visit-based advertising plans are overblown. Daniel Ballon, a technology studies fellow at the San Francisco-based Pacific Research Institute, said behavioral advertising is the price consumers have to pay for low-cost Internet usage.

“This type of advertising makes the technology much cheaper for consumers,” Ballon said. “An opt-in system doesn’t make any sense here because you’re not talking about privacy. It has a lot more to do with an individual’s personal comfort level with deep-packet inspection, not security. And this varies a lot between individuals.

“Consumers are trading privacy to use the service at a cheaper price, and they are doing so willingly,” Ballon said. “In a free market, if you want to opt out of deep-packet inspection, you should just use another service. Behavioral advertising is the price they pay for using the free technology.”

Most Will Opt In

The opt-in plan may also not do much to keep ads at a minimum. One expert believes the opt-in decision will result in no substantive change in policy, because there will be incentives for consumers to opt in.

“Providers can and probably will reduce prices if you opt in, to attract more consumers to that option,” said Bruce Abramson, CEO of San Francisco-based, a consulting company specializing in information policy issues. “It may end up with pretty much the same amount of people experiencing behavioral advertising minus a few who will pay more money to get less ads.

“In the end, it creates a positive public relations opportunity for providers because they are seen as giving people the opportunity to avoid deep-packet,” Abramson said.

Forestalled Regulation

Many industry professionals think the announcements of support for an opt-in plan have less to do with creating a less-intrusive and -cluttered Internet experience and more to do with staying ahead of government regulation.

“This is an attempt to avoid government intervention when it comes to deep-packet inspection,” said Ballon. “Even if only 20 percent of people opt in for behavioral advertising, it’s better than having the service completely banned.

“The providers want to make sure they are not being preemptively stopped from exploring how much money they can make from behavioral advertising, so they are self-regulating in order to stop the government from coming in,” Ballon said. “It’s a very shrewd business move.”

Aricka Flowers ([email protected]) writes from Chicago.