Industry Exec Slams Report as 'Mostly Fictitious'

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WASHINGTON ( -- Opening a new front on the privacy battle, a consumer group says it's not just the Web that
Who is watching whom?

marketers will be using to gain personal information and profiles about consumers. Interactive TV is the new villain.

In a 31-page report, the Center for Digital Democracy, an offshoot of the Center for Media Education, warned that media companies intend to use iTV to gain detailed personal information to target individual consumers.

The report urges that hearings be held to examine "detailed technical analyses of the data collection, data mining and advertising practices" of companies in the industry.

'Worst aspects' of Internet
"The model that these companies are following combines the worst aspects of the Internet and mass media, as the new systems are being designed to track not only every activity of users as they surf the Net, but also the programs and commercials they watch," said the group's report, calling iTV data-collection practices "a new threat to personal privacy in America."

The report mentions systems coming from AT&T Corp., Microsoft Corp., Scientific-Atlanta, ACTV, AOL Time Warner's America Online, TiVo, Cisco Systems, Gemstar-TV Guide International's TV Guide Interactive and Megabyte Networks.

Center for Digital Democracy
While privacy groups criticizing marketers may be no surprise, the Center for Digital Democracy report may offer new worries for marketers, given the success of some people behind the report in crafting public policy.

The Center for Media Education's series of studies on children and the Internet -- which reported that marketers were asking children for family information without asking parents' permission -- prompted the Federal Trade Commission to hold hearings and eventually helped lead to enactment of the Children's Online Privacy Protection Act.

More recently the group's executive director, Jeff Chester, was involved in a fight over America Online's purchase of Time Warner, successfully pushing the FTC to require that AOL provide open access for iTV.

A 'dark vision'
The latest report, which Mr. Chester said was researched by attending industry conferences and looking at company materials and analysts' reports, suggests a dark vision of media companies' plans.

Information gained from set-top boxes "will be harvested in data profiles, which will then be used to target individual consumers," the report said. "Every show watched, every ad viewed, every click and every download becomes fodder for the compilation of data and creation of user profiles."

The information will not only be stored, but could be available to marketers in ways that come close to violating federal law, the report claims, noting a statute barring cable TV companies from collecting information about users' viewing habits without permission. "The same technologies that threaten privacy on the Internet ... are now being adopted by the U.S. television industry," the report said.

The group's report calls on the FTC and Federal Communications Commission to hold hearings and investigate the iTV industry, and it calls on Congress to mandate action.

'Mostly fictitious'
Ben Isaacson, executive director of the Association for Interactive Media, called the report "mostly fictitious," saying some of the feared actions are against the law and the "threat" that advertisers will target individual consumers is unlikely.

He said advertisers' unwillingness to pay much more for targeted ads makes one-on-one advertising economically unrealistic, and he also said advertisers wouldn't take actions that would rile consumers.

"We feel there is no need for consumers' concern," Mr. Isaacson said, adding the industry has been working on privacy policies to further assure consumers.

Mr. Chester, while acknowledging the study may present the possibilities for iTV in a worst-case "Frankenstein's monster" scenario, said the report just explains what the companies have said.

"I am holding a mirror back to the industry," he said, "and they don't like what they see."

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