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Will New Broadband Rules Spark a Private Data Arms Race? –

Will New Broadband Rules Spark a Private Data Arms Race? –

Cable operators and telecoms can savor their win in Congress this week, after the House and Senate voted to lift privacy restrictions that the Obama Federal Communications Commissions put in place.

Among other provisions, the FCC rules required the Internet service providers, or ISPs, such as Comcast (CMCSA) , Charter (CHTR) , AT&T (T) and Verizon (VZ)   to receive affirmative permission from subscribers to tap some data. Now the ISPs will follow the same Federal Trade Commission privacy rules that apply to Facebook (FB) and Google parent Alphabet (GOOGL)  , which only require that consumers have not “opted out” of their data programs.  

The ISPs have new freedom to collect and monetize consumer data. Just how far they will go is not clear, Gartner analyst Andrew Frank said in an email.

“In theory they have deeper visibility into digital behavior than Facebook and Google, but the latter two (and Apple (AAPL) and other browser providers), through their browser and OS platforms, could easily deploy countermeasures,” Frank added. Deploying virtual private networks, for instance, could “obfuscate this data in the name of privacy if they felt truly threatened” and thwart the broadband providers from reaping too much data from Google, Facebook and Apple. 

A new arms race of private data could ensue, if the broadband providers and the Silicon Valley web giants who build vast wealth from Internet data don’t find a more diplomatic solutions. “I think it’s at least as likely that both sides tacitly agree that it’s in their mutual best interest to cooperate on privacy norms, compete quietly and keep this out of the headlines,” Frank said.

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FCC Chairman Ajit Pai hailed the House vote in a statement released Tuesday. He called last year’s move “overreach” by the commission. 

“Last year, the Federal Communications Commission pushed through, on a party-line vote, privacy regulations designed to benefit one group of favored companies over another group of disfavored companies,” Pai said. “Appropriately, Congress has passed a resolution to reject this approach of picking winners and losers before it takes effect.”

For many online privacy advocates, consumers will be the losers under the lighter restrictions. 

The Electronic Frontier Foundation put together a list of examples of prior alleged infractions by ISPs that it argues could happen after the lifting of the FCC rules, ranging from selling data to marketers to the placement of aggressive software on phones to track web traffic.

When the FCC passed the rules in October, Gartner marketing and advertising analyst Andrew Frank blogged about the regulatory issues they raised. “Chief among these is the gap between the new FCC rules that govern ISPs and the FTC rules that govern Internet companies such as Google, Facebook and Amazon, especially when it comes to the widespread use of browsing history and geolocation data to target ads,” he wrote.

“Critics point out the potential for consumer confusion when one opts out of data collection from an ISP (which must now pro-actively seek permission to collect data for advertising) and assumes this choice applies to data collection by other sites and services they use, which is not the case,” Frank added. “They also point out, more generally, that the order places “substantially greater burdens” on ISPs than other Internet companies face.”

Comcast cable boss Neil Smit told investors at a Deutsche Bank conference in March that the rules overlapped with protections at the FTC. “The privacy conversations, we always believed that there shouldn’t be two privacy regimes, and so having one privacy regime would be beneficial,” Smit said.

Verizon head of operations John Stratton said at the same conference that the network operators and the Internet giants who profit from the infrastructure should play by the same rules. “Whether it would be ISPs, web companies, anybody who’s in that same arena should be governed by the same set of principles. So the leveling of that structure between FCC and FTC we think is very healthy,” he said. 

Editor’s pick: This article was originally published on March 28 at 7:54 p.m. ET.

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