Charter and Project Canoe: one step forward, two steps back

Charter communications announced that it was canceling a controversial plan to sell advertisers information about the web usage patterns of customers. The plan had sparked backlash from privacy advocates, soon spreading to regulatory agencies, culminating in Connecticut Attorney General formally asking Charter to throw in the towel. As CNN/Money reports the market barely shrugged, sending the stock down a mere 3.5%, leaving it trading well above its 52-week low. All of that effort for nothing? Once the dust settles, Charter may be remembered for successfully generating free PR (but not necessarily of the desirable variety) and positioning itself as an ISP ready to make aggressive, ill-advised moves in the name of monetizing existing subscribers with complete disregard for privacy.

With the ink on that story barely drying, another news item from Reuters reports on privacy concerns about US cable providers have teaming up to mine the TV viewership data from their subscribers. Objective: stop the advertising revenue from shifting over to the web. Individual, targeting is the main differentiating factor for advertisement the web, whether this is done by profiling users over time or derived from point-in-time context, such as a search query. By contrast mass media suffers from its “broadcast” nature where many people by definition will see the same content. The ability to tailor the message to the audience is very crude by comparison, despite heavy investments to improve that over the years. For example today newspaper can target particular zipcode– it is possible to get New York Times to print a full page ad but only for certain zipcodes in Manhattan. Impressive as that sounds for an old school newspaper, this is primitive compared to the level of customization on the web.

There are two pieces to the puzzle: first one is being able to understand the audience better and the second one is being able to deliver unique, personalized content for each subscriber. Digital cable in principle already solves the second problem. Unlike analog systems where all channels are delivered to the user at all times and a “tuner” picks out the particular one, with digital cable the subscribers set-top unit requests a particular channel from the provider. That also allows solving the first problem: getting to know the subscriber. DVRs were the first devices with visibility into everything a user is watching and the ability to call home with this information. TiVo unwittingly created the first privacy scare over DVR tracking by commenting on the 2004 Super Bowl. Cable providers have long been able to derive similar conclusions. (The DVR does have an advantage in that it can report on multiple-views, including the number of times a recorded program is watched and when. But then again many DVRs today are bundled with cable packages and cobranded by the provider so it is not clear who is calling the shots on the device logic.)

With both pieces in place, what remains is creating the platform. Enter Project Canoe. Backing this new initiative are Time Warner, Comcast, Cox, Cablevision — and Charter. From a privacy perspective there is good reason for concern. The extent of data mining is unclear. A key question is whether it will be limited to TV content. Several of these companies are both cable providers and broadband Internet providers. Charter crossed the line once before backing down. The current attitude is summed up in this quote:

“The cable industry is betting that full disclosure to subscribers about the information being collected, the ability for them to opt out, and the attraction of more relevant ads would help overcome potential misgivings.

The problem is few people read the disclosures and even fewer understand the extent of data collection and its implications to make an informed decision on whether this practice is consistent with the person’s personal values on privacy. Even for users who decide to take issue, some fraction will be deterred by the difficulty of the opt-out process. Quoting an analyst about the initiative the article concludes:

“It’s all but certain that the cable operators will have to set a third-party clearing house for information to safeguard privacy concerns,” Moffett said.

The article does not speculate on which independent entity would be stepping up to the plate for that role. In general the idea of trusted third-parties safeguarding information is very attractive in principle, but so far there have been no takers. Even the organization trying to offer a much simpler service, third-party verification of privacy practices have been dogged by skepticism about their effectiveness.


Leave a Reply

Please log in using one of these methods to post your comment: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s