Privacy advocates' next battle: interactive TV

An experiment will soon get under way in 30,000 homes in the leafy suburb of Aurora, Colo., that has the potential to transform televisions into what the industry believes could be the ultimate interactive marketing tool. But privacy advocates contend it will be more like Big Brother.

Aurora will test new software that will allow advertisers to send a Pampers commercial into a home with children, while at the same time, the bachelor in a condo down the road gets an ad for the new Audi TT Roadster.

It is the first step in the development of what's come to be called "T-Commerce," or television commerce - the ability to buy instantaneously over the television through new digital lines and sophisticated cable set-top boxes. The technology could eventually allow Americans to sit in their homes, see advertisements tailored to their tastes during "Frasier," and, with just a few clicks, buy a product.

Television executives say T-commerce will ensure that consumers get commercials only about things that interest them - which increases their value. Critics worry it will strip Americans of their privacy by turning their televisions into prying eyes.

"This is the beginning of a major threat to personal privacy ... right in your living room and your children's bedrooms," says Jeff Chester, of the Center for Digital Democracy in Washington. "They're able to track not only what you watch, but also collect information about how you watch and what you might buy."

The industry maintains such concerns are premature and overblown. Indeed, AT&T Broadband's experiment in Aurora, which begins this fall, is designed first and foremost to see if the basic technology that sends different commercials into different homes will actually work outside of the laboratory.

As for data collection, they point out that the 1984 Cable Act prevents them from sharing customers' "personally identifiable" information with anyone.

AT&T, in fact, is buying general information about people and their neighborhoods from third-party marketing companies - the kind used in direct-mail campaigns. They will use that to decide which commercials will go into which homes.

"The idea is that it's more relevant to consumers and more relevant to advertisers because they're actually sending information to the people who will be interested in hearing it," says Tracy Baumgartner, a spokeswoman for AT&T Broadband. "The advertisers have no idea who's getting their ad. All they know is that they're buying a 'kids' or a 'no kids' [demographic group]."

But in a report released yesterday, Mr. Chester and the Center for Digital Democracy use industry documents to show the Aurora experiment is only the first step in a much larger vision - one that a Deutsche Bank study termed "advertising nirvana." It's the marriage of the "emotional power" of television and the immediacy of interactive buying, both tied to the power of personalized ad pitches.

The report contends that interactive television gives cable and satellite companies and their advertisers access to some of the same data-collecting and personal-profiling techniques that raised alarms on the Internet.

"Every show watched, every ad viewed, every click, and every download becomes fodder for the compilation of data and the creation of user profiles, leading ultimately to pinpoint targeting of ads to individual consumers," says the report.

Chester and his staff spent months collecting industry documents and going to trade shows to monitor the development and the direction of this nascent technology. They found such things as software for cable set-top boxes that will register whether you click off in the middle of a commercial - an action that could be reported back to the advertiser.

"There's something extremely intrusive and disturbing that they would create such a system that would monitor if you turn off a commercial," says Chester.

The report also points out that the 1984 Cable Act does not prevent TV satellite companies or phone companies from sharing information. It calls on Congress to begin setting out clear privacy guidelines before the technology spreads. By 2006, as many as 50 million US homes could have interactive TV.

But the industry again says such concerns are exaggerated. The world's leading interactive technology and TV companies have formed an industry-wide group to monitor privacy issues and recommend guidelines for self-regulation.

"[They are] trying to be very clear about what kind of information can be collected and how it's going to be used," says Ben Isaacson, of the Association for Interactive Media, a trade association. "We're working ... to better understand what their legal and ethical practices should be."

Media analysts say such moves will be key to consumer acceptance of the new technology. Indeed, consumer distrust is a primary reason Internet commerce has not taken off as quickly as some analysts had predicted. A study by the Pew Research Center in August 2000 found that 84 percent of Internet users are concerned about "businesses or people they don't know getting personal information about themselves or their families."

But some privacy advocates contend that the cable and television industries would have more credibility if they let consumers in on decisions about how interactive television should be best utilized and developed in the future.

"Most people have an instinctual distaste for companies collecting detailed information about them," says Andrew Shen, a policy analyst at the Electronic Privacy Information Center in Washington. "And the harm comes when you start segmenting the audience without them knowing it. What it basically does is take the television watcher out of the driver's seat and put the advertisers there."

(c) Copyright 2001. The Christian Science Monitor