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ITIF Defends Pay-for-Privacy

8/22/2016 8:00 AM Eastern

WASHINGTON — The Information Technology & Innovation Foundation says preventing pay-for-privacy business models in the Federal Communications Commission’s new broadband privacy rules would be both bad policy and “remarkably paternalistic.”

 

That came in a new report issued by ITIF, a nonprofit think tank whose honorary co-chairs include Rep. Anna Eshoo (D-Calif.), ranking member of the House Communications Subcommittee, and Rep. Darrell Issa (R-Calif.), a former tech executive.

 

“Offering similar services at different prices for different classes of customers — what economists call “price discrimination” — is extremely common and widely accepted as welfare- maximizing in most circumstances,” ITIF analyst Doug Brake said in the report.

 

Brake called it a “general fact” that most consumers are willing to trade their data for benefits to them or to society.

 

The FCC has not proposed disallowing Internet-service providers from incentivizing customers to allow their information to be shared for targeted marketing, but it has asked if “business practices that offer customers financial inducements, such as lower monthly rates, for their consent to use and share their confidential information, are permitted under the Communications Act,” and, if so, whether they should be opt-in or opt-out choices for consumers.

 

In fact, in initially trumpeting the proposal, FCC chairman Tom Wheeler told National Public Radio the FCC was empowering consumers to say how their information was used, then “empowering them to say, ‘Is there some value on my information and work some kind of a deal with an Internet-service provider to put a value on that information?’ ”

 

That sure sounds like pay for privacy, but the chairman has been getting pushback on that.

 

“Broadband providers should not be able to offer services where they penalize privacy-conscious customers by forcing them to pay a higher subscription fee,” the New America Foundation’s Open Technology Institute has told the agency.

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