Business Column

Strauss: Here’s what you really need to know about the FCC rolling back consumer data rules

Consumer privacy, one of the most heavily debated issues of the 21st century, has been called to the table yet again in a very contentious way. President Donald Trump recently signed a potentially problematic internet privacy bill that repeals consumer protection laws, and if his administration does not replace these rules with guidelines that restrict internet service providers, then consumer data is at risk.

Trump’s signature came shortly after the bill was approved by both the House and Senate and has caused outrage among consumer privacy advocates and the tech community. The law, which rolls back consumer privacy laws issued by the Obama administration, is a major win for internet service providers because it gives them a way to compete in the digital advertising and marketing space alongside Google and Facebook.

It also leaves internet customers susceptible to enhanced data aggregation and profiling because ISPs no longer must get consent from their customers before trading their data with third parties for marketing and advertising purposes.

This ruling sheds light on a larger implication for technology companies: The world is entering the “big-data” age in which companies with the highest quality data and analytics reign supreme over their counterparts.

The data that comes into question is referred as customer proprietary network information, or CPNI. This is the information that ISPs require to connect a customer to their internet services, such as the customer’s name and location.

There is a misconception that ISPs will now have access to sensitive medical and bank records, but, in reality, ISPs will only know what websites users are going to, and not what they do once they get there. Most of that sensitive information will be protected by HTTPS encryption.

The ISPs that fought to retract the Obama-era rules claim that companies such as Google and Facebook have an unfair advantage when it comes to collecting consumer data for marketing and advertising purposes. But there’s a slight problem with this claim.

Internet users can choose to use Google or Facebook’s products, but they don’t always have the option of using a different internet provider. Many providers have geographic monopolies which leaves consumers with the shallow choice of internet or no internet. Rep. Jim Sensenbrenner (R-Wis.) said Friday that consumers shouldn’t be concerned with the law because “nobody has got to use the internet.” Although it is true that consumers don’t have to use the internet, they shouldn’t be making that decision based on how ethically their service provider handles their potentially sensitive information.

Unlike Sensenbrenner, many Democratic legislators have expressed outrage at the new rule. Sen. Chuck Schumer (DN.Y.), encouraged consumers to call their Congress members and tell them to vote against the repeal. Once the bill passed, he pressured Trump to veto it.

Schumer fears the new rule will cause consumers to lose their privacy on the internet because without the Obama administration’s rules, ISPs will not need permission to release consumer data to advertisers.

“The lack of robust privacy policy and regulations leaves us (as individuals citizens/consumers) vulnerable to a vast amount of data collection and data merging,” said Terrell Northrup, an assistant professor of international relations at Syracuse University, in an email.

For those who believe ISPs will be able to aimlessly sell consumer data without any protection for consumers, this may not be the case. There is a possibility that Ajit Pai, the new Federal Communications Commission chairman, will replace the Obama administration rules with a set of different rules that would most likely include looser regulations.

More lenient regulations would allow ISPs to operate more freely and reduce their costs, but this leniency must not come at the expense of consumer privacy. Pai is a free-market conservative, but that doesn’t mean any set of rules he champions will come without protection for consumers.

Consumer data is the world’s newest and most highly demanded commodity. Many companies build their business models and value propositions on their ability to somehow capitalize on consumer information. The business environment is approaching an inflection point as to what extent businesses will have the ability to use, trade and analyze information about customers.

It seems that the boundaries in this area are continuously expanding due to the rapid evolution of technology and its capabilities with data analytics. The important question is: When will they go too far?

Technology is limitless, creating a situation where its capabilities advance the need to increase data gathering. Technology also facilitates scalable customization, which requires personal information about customers.

Many people will blame ISPs for wanting to take advantage of personal data just to make more money. But no one seems to consider the fact that increased pressure from customers to produce the highest quality product or service pushes companies to develop more personalized products. The data revolution was fueled by customer demands just as much as it was by advances in technology.

Daniel Strauss is a sophomore entrepreneurship and finance double major. His column appears weekly. He can be reached at dstrauss@syr.edu and followed on Twitter @_thestrauss_.

 

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