Telecoms' Ambitions on Targeted Ads Seen Curbed by F.C.C.'s New Privacy Rules

["Dave Farber" <dave () farber net>]

---------- Forwarded message ----------
From: *Hendricks Dewayne* <dewayne () warpspeed com>
Date: Saturday, October 29, 2016
Subject: [Dewayne-Net] Telecoms' Ambitions on Targeted Ads Seen Curbed by
F.C.C.'s New Privacy Rules
To: Multiple recipients of Dewayne-Net <dewayne-net () warpspeed com>


Telecoms’ Ambitions on Targeted Ads Seen Curbed by F.C.C.’s New Privacy
Rules
By SAPNA MAHESHWARI and CECILIA KANG
Oct 28 2016
<http://www.nytimes.com/2016/10/29/business/media/telecoms-
ambitions-on-targeted-ads-seen-curbed-by-fccs-new-privacy-rules.html>

In recent years, companies like Verizon and AT&T have made no secret of
their ambitions to build online advertising businesses that can take on the
behemoths of Silicon Valley.

But those plans, and the billions of dollars that have been invested in
them, are in peril after federal officials approved broad new privacy rules
that will limit the extent to which companies can collect and use digital
information about individuals.

The Federal Communications Commission’s ruling on Thursday that internet
service providers must get permission to gather and share consumers’
private data, including web browsing, app use and location, threw a wrench
in the plans of several telecommunications and cable companies that need at
least some of that information to pitch premium products to advertisers.
It’s an especially big deal for Verizon, which spent more than $4 billion
on AOL last year and is prepared to spend billions more for its pending
acquisition of Yahoo, and for AT&T, which just made a blockbuster $85.4
billion bid for Time Warner.

“The challenge for Verizon and AT&T is that both companies have made big
acquisitions that hinge largely on their ability to monetize advertising
inventory more effectively, and the way they plan to do that is by
targeting it better,” said Craig Moffett, senior analyst at
MoffettNathanson. “If their hands are tied by the new F.C.C. rules, then
that’s a very, very big deal.”

Currently, broadband providers can track users unless individuals
specifically ask them to stop. The F.C.C. decision, set to take effect in
about a year for major providers, has been hotly contested, in part because
the rules apply only to internet service providers, or I.S.P.’s. They do
not extend to online ad juggernauts like Google and Facebook — web
companies that the F.C.C. does not regulate — which has spurred complaints
of a double standard.

Companies like Comcast, Verizon and AT&T are only a small portion of the
targeted-ad industry, but are seen as having great potential because of
their broad view of online habits. Tom Wheeler, the chairman of the F.C.C.,
has contended, however, that while consumers may choose not to go on
Facebook or use Google, they need I.S.P.s to get access to the internet, a
view in line with the agency’s classification of broadband providers as
utilitylike services.

The rapid rise of new “smart” devices that use broadband services, like
thermostats and refrigerators, encouraged the F.C.C. actions. “Who would
have ever imagined that what you have in your refrigerator would be
information available to AT&T, Comcast or whoever your network provider
is?” Mr. Wheeler said in a statement this week.

Innovation in the advertising industry is currently centered on
understanding consumer behavior across devices to better place, track and
measure ads, said David Cohen, president of North America at Magna Global,
a major ad-buying firm.

“Getting a single view of you or me as I go from PC to tablet to mobile to
television — that’s a real hot area in the marketing space,” Mr. Cohen
said. “The ones who have the best visibility into that today are the big
walled gardens, and that’s primarily Google and Facebook.”

Verizon has been trying within the last six months to leverage some
nonpersonally identifiable information for improved targeting across AOL’s
properties, which include MapQuest, The Huffington Post and TechCrunch,
according to Mr. Cohen.

[snip]

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