Net Soup: Frank Beacham

Is ITV the Next I-Spy?

Personal privacy violations on the Internet have become so rampant that even the most-unsophisticated users are quickly learning not to entrust their private data to nosy Web sites. Now, a disturbing new report warns that the worst is yet to come if interactive television (ITV) ever takes off.

The 30-page document – "TV That Watches You: The Prying Eyes of Interactive Television" – is the result of a six-month research project by the Center for Digital Democracy (CDD) in Washington, D.C. The nonprofit organization promotes open access to the Internet and diversity of expression in electronic media.

The new CDD report, released in June, predicts that interactive TV contains powerful new technology that can closely track the habits of individual television viewers without their knowledge. "This next generation of mass-market media – expected to be used by millions of consumers in the next few years – is deliberately being designed to record the viewing and spending habits of the viewer," the report said.

"Profiles that include one's age, discretionary income, parental status, along with psychographic and demographic data, will be collected, analyzed and made available to marketers, advertisers, programmers and others," the report continued. "Television as we know it today is undergoing a major transformation, enabling it to harness the 'one-to-one' direct marketing power associated with online media."

SOPHISTICATED SET-TOPS

The CDD said it gleaned information for the study from technology blueprints and the business plans available on ITV marketing Web sites, the sites of their technology partners, SEC filings, independent market research reports and industry publications.

It found that sophisticated new set-top boxes and advanced software allows ITV vendors to harvest data profiles, which will then be used to target individual consumers with personalized advertising. "The same technologies that threaten privacy on the Internet, including data mining, user modeling, and intelligent agents are now being adopted by the U.S. television industry."

For the first time ever, the report said, "companies are able to collect detailed information about what each user of the system is doing, which shows they watch, when and how long they watch, what advertisements they see, whether they change channels during ads or shows, and more.

"Moreover," the report continued, "as additional features are added onto the system, even more information is collected, including what Web sites are visited, what is read on the sites, which Internet newsgroups are used, the duration of time on the sites, and what purchases are made. A key concern for privacy is that each set-top box has a unique identifier built into it that allows for the service provider to identify the household or location of that box."

TELEVISION COMMERCE

This new data collection infrastructure – called T-Commerce (for television commerce) – is expected to be used by some of America’s best-known corporations, including Microsoft, AT&T, Liberty Media, Proctor and Gamble, NDS (Rupert Murdoch's News Corp.), Cisco, A.C. Nielson, Scientific-Atlanta and Young and Rubicam.

"The model that these companies are following combines the worst aspects of the Internet and mass media, as the new systems are being designed to track not only every activity of users as they surf the Internet, but also the programs and commercials they watch as well. We believe that ITV data-collection practices represent a new threat to personal privacy in America," the CCD said.

Jeffrey Chester, one of the authors of the report, said the findings are already provoking debate in Congress. He's hopeful of a sympathetic reception because Sen. Ernest Hollings, the new Democratic chairman of the Senate Commerce Committee, has been an advocate of consumer privacy rights.

The report recommends that government regulators investigate the practices of the interactive television industry for potential violations of law. It urges that Congress update and extend the Cable Communications Policy Act of 1984 to cover all interactive media, allow easier enforcement and greater penalties for violations. And it calls on states to enact their own safeguards to ensure citizens are protected from consumer privacy and marketing abuses.

DO THE RIGHT THING

Responding to the CDD report on behalf of the ITV industry, the Association for Interactive Media (AIM), a subsidiary of the Direct Marketing Association, posted a rebuttal on the Internet.

AIM said the ITV industry is already at work to "do the right thing" for subscribers and the public, and its members have posted extensive privacy policies that explain what data is collected and how it is used. Future ITV services, AIM said, will enable users to opt-in and create data profiles for themselves and their families "so that they can personalize the kinds of content and advertising they receive."

AIM contends that most – but not all –the information collected by ITV services is not personally identifiable and is used as an aggregate representation of viewers’ patterns.

AT&T Broadband, a leading proponent of ITV, suggests the technology will enhance the experience of viewers. In an interview with the Washington Post, Tracy Baumgartner, spokeswoman for AT&T Broadband, said the company carefully protects customer information.

"Advertising has value," Baumgartner said. "If you can get more-relevant messages to the right people, it should benefit those people and advertisers."

Frank Beacham is a New York City-based writer and producer. His Web site is at www.beacham.com. E-mail: frank@beacham.com.