President Donald Trump this week signed the repeal of FCC rules that were intended to prevent customer information from being used by internet service providers without the user’s knowledge or permission. The rules, which were adopted under the Obama administration last fall, were set to go into effect later this year.
With the regulations, ISPs would have been required to get a customer's consent before collecting, sharing or selling information such as app usage history, geolocation, financial and health information, social security numbers, web browsing history and the content of communications. Leading up to last week’s vote on the legislation, a number of small internet providers sent an open letter urging the Senate to vote against the resolution.
“We really think it would be a violation of [our customers'] trust and an inappropriate abuse of our position if we engage in monetizing their activity or use of our service beyond the membership fees that we charge,” Sonic CEO Dane Jasper tells Entrepreneur.
Jasper’s company is a mid-size telecommunications carrier and internet access provider based in California, and it is one of the businesses that signed the letter. One of his concerns around the new legislation is its provision that prevents the FCC from enacting similar privacy rules in the future.
“What that creates for carriers is a very clear signal that analyzing consumer behaviors on the internet across all the services and websites that they visit through the conduit that the carrier provides is OK,” Jasper says. “Carriers are now free to create business models that monetize that behavior, separately from and in addition to the subscription fees we charge customers for access to the internet. That to me is downright creepy.”
One possible business model that could arise is highly targeted direct marketing. For example, a customer who emails a friend about meeting for breakfast could get an ad for cereal moments later, according to Rudy Rucker, co-founder of MonkeyBrains, another California-based independent ISP that signed the open letter.
Describing customer data as now being “fair game,” Jasper says he thinks it's possible that businesses that have a model dependent upon the sharing of sensitive information could take a hit in the wake of the legislation, because customers could be less likely to want to share confidential information on the internet in general. He adds that while he doesn’t believe that any of the larger national carriers will make a commitment to protect customer privacy, he hopes that customers who can do so will vote with their wallets and punish those who don’t step up.
The repeal of the protections could push customers to make additional moves to protect their privacy, such as using a virtual private network (VPN), Jasper says.
One business that provides anonymity services is NordVPN. Jodi Myers, the company’s head of communications, tells Entrepreneur that before the vote in Congress, the company had seen a 90 percent uptick in inquiries, and after the bill’s approval, that amount surged to nearly 200 percent.
NordVPN is headquartered in Panama and has customers all over the world. Myers says that the increase in interest around privacy tools in the United States is familiar. “The same [thing] happened when the U.K. passed the intrusive Investigatory Powers Act [and when] Australia passed their own anti-privacy data retention laws,” she says.
For consumers and entrepreneurs alike, in addition to VPNs, Myers recommends encryption services and secure communication tools, as well as making sure that all of your passwords, firewalls and antivirus software are strong and up to date.
Like NordVPN, Rucker says that MonkeyBrains has seen an increase in queries regarding its services. However, while MonkeyBrains is available to consumers in the San Francisco area, many people across the country have only one or two options available to them.
Even if consumer choices are limited, a push for privacy protection down the line could create a space for startup ISPs to move the needle, says Alex Menendez, Rucker’s co-founder at MonkeyBrains.
“It’s a little sad that [customers] have to distrust the service they are paying for. It leads the way for another company to come in with a full-blown privacy stance and take that customer,” Menendez says. “The more that smaller ISPs start gobbling up lucrative density markets for the large ISPs, the more they are going to be forced to compete and ultimately improve their terms of service.”
Though the Obama-era rules were never implemented, and the passage of the legislation is essentially an affirmation of the business environment that has existed all along, it seems that with a growing customer cognizance around data protection, there could be a business opportunity for companies that emphasize customer privacy.
“The question should really be, do you want to be in a business that is geared toward selling users’ data vs. how to protect it?” Rucker says. “We sell internet, and it would be against our principles to turn around and attempt to sell the usage patterns of users -- it would be similar to Verizon recording, digitizing and then selling your conversations to advertisers or even to other individuals. Imagine a conversation you had 10 years ago with a friend was suddenly online and for sale for $1 -- that is the direction the Senate Joint Resolution 34 is sending us.”