The new consumer privacy rules proposed by FCC Chairman Tom Wheeler last week have the potential to handicap Internet Service Providers (ISPs) like Verizon and AT&T as they seek to compete with other digital advertisers like Google and Facebook, Moody’s Investors Services said Tuesday.
As reported by Reuters, Moody’s said the rules pose a “long-term risk” to all broadband providers who have ad sales exposure and would lend a “distinct competitive advantage” to online digital advertisers.
Announced last week, Wheeler’s privacy rules would force ISPs to gain consumer consent before collecting certain types of user data and using it for targeted advertising.
The Notice of Proposed Rulemaking came on the heels of the FCC’s $1.35 million “supercookie” settlement with Verizon in which the carrier agreed to notify consumers about its targeted advertising programs and gain their consent before sharing its tracking data with third parties.
According to Moody’s, the proposed FCC rules fail to align with those currently enforced by the Federal Trade Commission (FTC), which oversees entities like Google and Facebook. While the FCC’s rules would restrict ISP collection of user data and its use in targeted advertising, they would allow Internet companies to continue to capitalize on use of the information, Moody’s said.
Moody’s also highlighted the hindrance the rules would present to carriers’ mobile video efforts, which rely heavily on advertising revenues.
The comments from Moody’s echo concerns voiced by AT&T’s Senior Vice President of Federal Regulatory Bob Quinn last week.
“In the 1980’s telecommunications industry, when companies were required by law to stay in their lanes, it might have made sense to have rules that applied only to one set of providers in an industry. But that was 30+ years ago, and we are long past that stage in U.S. communications policy,” Quinn wrote on AT&T’s Policy Blog. “Limiting ISPs’ ability to compete with ad supported business models – which are overwhelmingly favored by consumers – is bad for consumers and ultimately bad for broadband investment in this country.”
Filed Under: Industry regulations