AT&T Gives Discount to Internet Customers Who Agree to Be Tracked

Customers Must Pay $29 More to Avoid Targeted Ads

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How much do cookies cost? For AT&T's fiber-optic internet customers, they're $29 a month.

When the telecom giant brought its speedy broadband service, GigaPower, to Kansas City, Mo. on Tuesday, it came with two prices: a standard option of $70 a month, and a steeper $99 price for customers who opt out of its web browsing tracking.

"We want to give customers a choice," an AT&T spokeswoman said in an email. "This makes it possible for customers to receive more relevant offers and advertising based on their browsing activity." The company declined to comment on the advertisers involved or if the offering would extend to its larger U-Verse broadband business.

The company's Kansas City experiment marks another step in the wireless carriers' efforts to turn their pipes into ad dollars. And it comes from the business arm of AT&T, which is facing competition from Google.

The two-tiered pricing has been available since 2013 for GigaPower consumers, but AT&T did not broadly alert customers or advertisers. The Wall Street Journal first reported on the expansion of the offering to Kansas City.

In July, Verizon introduced a similar offering, Smart Rewards, for its wireless subscribers. Customers could win discounts and giveaways, some sponsored by outside advertisers, in exchange for signing up for Selects, the carrier's program for tracking web and mobile-app behavior.

AT&T's newest deal, with its U-Verse broadband service, is more akin to a tactic from Amazon, which sold an ad-sponsored version of its Kindle tablet at a discount. The U-Verse offering also mirrors the 'premium' model of popular platforms, like Pandora, which lets users pay to eschew ads.

The wireless carriers have entered the ad-selling business clumsily.

AT&T once had a robust offering for advertisers, AdWorks, which combined TV, mobile and web data tracking. But it shuttered the web and mobile service in 2013, partially over privacy concerns. Verizon began selling subscriber data through ad-tech partners in May. Its tracking tool, a code that left a permanent identifier on mobile phones, faced scrutiny from privacy advocates, forcing the carrier and its partners to alter its tracking method. AT&T tested a similar program but closed it down, the company said.

AdWorks currently sells data to advertisers on its TV customers, which totalled six million as of last quarter. The AT&T spokeswoman did not comment on whether ad sales for GigaPower would go through AdWorks.

AT&T counts 12 million U-Verse subscribers, adding 405,000 subscribers and reporting $3.9 billion in revenue last quarter. Verizon's competing service, FiOS, reported 16.9 million total customers last quarter.

But AT&T has other concerns. With Kansas City, GigaPower, the gigabyte-per-second offering introduced in 2013, now reaches six markets. It operates at the same speed and in several of the same cities as Google Fiber, the growing broadband service from the dominant digital ad seller.

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