FCC Broadband Plan and Privacy

The FCC presented this week its much-awaited National Broadband Plan.

Parts of the plan deal with online privacy, as broadband makes collection of personal data easier.

The FCC notes (Chapter 4, p.53) that “the emergence of broadband and the growing use of the Internet make aggregation of detailed personal data much easier and more valuable.” Since it is now easy to collect data from Internet site visitors, even single companies have the power to collect, aggregate and analyze massive amounts of personal data, allowing them to create a “digital identity,” that is, a very detailed picture of an individual, from his geographic location, his health, his eating and entertainment tastes, and so on.

This data is of great value to marketers, allowing them to target specific ads based on these digital identities, making it six times more likely, according to the FCC, that a consumer thus targeted will click on an ad.

The FCC is concerned about the impact that the ability of gathering these digital identities will have on competition. On one hand, companies already in the market have collected this massive amount of data over the years, allowing them to fine tune their marketing strategy. Indeed, according to the plan, this data is so valuable that these companies “increasingly offer their products and services free of any monetary charges. Consumers gain access to a valuable service, and businesses gain valuable information.”

In exchange for giving companies access to our personal data, consumers gain free products and services: I have a lot of problem with that statement. Let’s consider that personal data has a market value, allowing us to trade it for free products. Well, personal data does not have a sustainable value. The scenario "trade it once, lose it for ever" is a real possibility, as it is very easy to copy digital data. Like copyright pirates, we could see the emergence of data pirates. So, increasingly, as I trade more and more of my personal information, I will have less and less info to trade for these free products, and that may prevent me from dealing effectively in the market.

True, we evolve constantly as human beings, and new data is added to our digital identify every day. However, not every new data has the same value: the fact that Jane discovered that indeed Strawberry Swirl is her favorite ice cream flavor is not as important for her, nor as important for a marketer, as the fact that she will give birth to triplets in the Fall.

New firms without access to these detailed “digital identities” face competive challenges: The report goes on by noting that since new firms have not yet gathered these digital identities, they cannot monetize their audience through advertising and thus are facing competitive challenges.

The solution, according to the plan, is giving individuals control of their digital profiles: “Giving consumers control of their digital profiles and personal data, including
the ability to transfer some or all of it to a third party of their choice, may enable the development of new applications and services, and reduce barriers to entry for new firms.”

But is it really possible to transfer data to a third party without that data loosing some of its value? Our data has already been traded by Firm number 1 to an advertiser. If Firm number 2 comes later and proposes the same product, our digital identity, to the same advertisers, isn’t the value of our data then lower? Just as a digital photograph, digital personal information can be copied and stored instantly. True, Firm number 2 may have gathered more information on us, but if individuals keep “reselling” their digital profiles to every company in the open market, these profiles will lose their value, as every advertiser will be able to gain access to them, and thus none of them will have any longer the competitive advantage of knowing its target audience with such precision. Every firm will have that power, and the value of our digital identity will be diluted, thus impairing our own ability to trade it.