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S. HRG. 110–791 

BROADBAND PROVIDERS 

AND CONSUMER PRIVACY 

HEARING 

BEFORE THE

COMMITTEE ON COMMERCE, 

SCIENCE, AND TRANSPORTATION 

UNITED STATES SENATE 

ONE HUNDRED TENTH CONGRESS 

SECOND SESSION 

SEPTEMBER 25, 2008 

Printed for the use of the Committee on Commerce, Science, and Transportation 

( 

(II) 

SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION 

ONE HUNDRED TENTH CONGRESS 

SECOND SESSION 

DANIEL K. INOUYE, Hawaii, Chairman 

JOHN D. ROCKEFELLER IV, West Virginia 

JOHN F. KERRY, Massachusetts 

BYRON L. DORGAN, North Dakota 

BARBARA BOXER, California 

BILL NELSON, Florida 

MARIA CANTWELL, Washington 

FRANK R. LAUTENBERG, New Jersey 

MARK PRYOR, Arkansas 

THOMAS R. CARPER, Delaware 

CLAIRE MCCASKILL, Missouri 

AMY KLOBUCHAR, Minnesota 

KAY BAILEY HUTCHISON, Texas, Ranking 

TED STEVENS, Alaska 

JOHN MCCAIN, Arizona 

OLYMPIA J. SNOWE, Maine 

GORDON H. SMITH, Oregon 

JOHN ENSIGN, Nevada 

JOHN E. SUNUNU, New Hampshire 

JIM DEMINT, South Carolina 

DAVID VITTER, Louisiana 

JOHN THUNE, South Dakota 

ROGER F. WICKER, Mississippi 

MARGARET L. CUMMISKY, Democratic Staff Director and Chief Counsel 

LILA HARPER HELMS, Democratic Deputy Staff Director and Policy Director 

CHRISTINE D. KURTH, Republican Staff Director and General Counsel 

PAUL NAGLE, Republican Chief Counsel 

(III) 

C O N T E N T S 

Page 

Hearing held on September 25, 2008 ..................................................................... 1 

Statement of Senator Dorgan ................................................................................. 1 

Statement of Senator Hutchison ............................................................................ 2 

Statement of Senator Klobuchar ............................................................................ 26 

Statement of Senator Thune ................................................................................... 29 

Statement of Senator Vitter .................................................................................... 3 

Statement of Senator Wicker .................................................................................. 31 

WITNESSES

Attwood, Dorothy, Senior Vice President, Public Policy and Chief Privacy 

Officer, AT&T Inc. ................................................................................................ 4 

Prepared statement .......................................................................................... 5 

Sohn, Gigi B., President, Public Knowledge .......................................................... 15 

Prepared statement .......................................................................................... 16 

Stern, Peter, Executive Vice President, Chief Strategy Officer, Time Warner 

Cable ..................................................................................................................... 8 

Prepared statement .......................................................................................... 10 

Tauke, Thomas J., Executive Vice President, Verizon ......................................... 11 

Prepared statement .......................................................................................... 13 

APPENDIX

Inouye, Hon. Daniel K., U.S. Senator from Hawaii, prepared statement ........... 37 

(1) 

BROADBAND PROVIDERS 

AND CONSUMER PRIVACY 

THURSDAY, SEPTEMBER 25, 2008 

U.S. SENATE, 

COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION, 

Washington, DC. 

The Committee met, pursuant to notice, at 10:06 a.m., in room 

SR–253, Russell Senate Office Building, Hon. Byron L. Dorgan, 

presiding. 

OPENING STATEMENT OF HON. BYRON L. DORGAN, 

U.S. SENATOR FROM NORTH DAKOTA 

Senator DORGAN. The hearing will come to order. 

This is a hearing of the Senate Commerce Committee. We have 

a hearing today on broadband providers and consumer privacy, a 

subject which is interesting and new, relatively new, to this Committee. It is the second of a number of hearings on this subject. 

I wish all of you good morning. 

I am joined by Senator Hutchison who is the Ranking Member. 

Senator Inouye is not able to be with us and has asked me to chair 

the hearing. I chaired the previous hearing on this subject as well 

at his request, and I am happy to do that. 

This hearing is to provide an examination of the privacy rights 

of Internet users and the practices of broadband providers. The 

Commerce Committee has had a long interest in the subject of protecting privacy, and now I feel we need to take a closer look at 

Internet users’ privacy as the field of online advertising develops. 

I want to make it clear that I understand and I think all of my 

colleagues in the Congress would understand that there are many 

benefits to online advertising. It is an architecture that is important to our economy. It allows many of the sites and services that 

we all know and understand to grow and thrive. So this is not an 

inquiry about whether advertising is relevant or important. Advertising on the Internet plays an important role in Internet commerce. 

While most of the conversation about Internet advertising in the 

past years has been focused on economic benefits, however, consumers say in surveys that they worry about privacy. Survey results released today from Consumer Reports shows that 72 percent 

of consumers are concerned that their online behavior is being 

tracked or profiled, and they are concerned about that. The poll 

found that 93 percent of Americans think Internet companies 

should always ask permission before using personal information. 

2 

I think it is the case that the invisibility of data collection practices and users’ ability to control their information is a concern, 

and I think it is time that the Senate and regulators try to understand and focus on what are the privacy questions and the aspects 

of the issue of privacy that we should be dealing with. 

In July, we held a hearing on privacy to examine concerns about 

consumers being profiled and being tracked online. There is a lot 

the Committee has yet to learn about data collection practices. We 

learned some things at the last hearing. We heard from NebuAd, 

a company that was working with some Internet service providers 

to gain access to the content on their networks in order to provide 

advertisers profiles of broadband providers’ customers. NebuAd 

later halted those plans. 

In July, the broadband providers were not able to attend our 

hearing. For many of them, this was a new area, and today we appreciate the participation of AT&T, Verizon, and Time Warner 

Cable. It should be noted that these companies had not previously 

agreed to provide customer data to NebuAd or similar companies. 

We also appreciate the participation today of Public Knowledge 

at this hearing. 

We will focus on privacy expectations for customers of Internet 

service providers. People do expose themselves online by where 

they go and what they do, and often type in sensitive information, 

personal information, and financial information. We have very little competition in the broadband market. As a matter of fact, 

around most of this country, most Americans have one or at the 

most perhaps two choices for broadband. And as broadband service 

is so vital to the American people and to our communities, we want 

to make sure that providers are respecting the privacy protections 

of consumers and that those protections are in place. Internet service providers have access to all of that customer’s information and 

behavior, and the question is what is being done with it. 

Again, let me emphasize that I appreciate the Internet service 

providers being willing to come to us today and talk about these 

issues because the issues are not just important to policymakers. 

These issues I think are important in the long term to Internet 

service providers as well. 

I do think we need to update our privacy laws and we need to 

ensure we have similar protection across platforms. We need to 

protect sensitive information, make sure customers know what 

companies are doing with their information so that customers can 

make informed choices about their participation, and are given 

clear information about opt-in or dealing with other regimes that 

might be established. 

This is the second hearing, and I assume that the Commerce 

Committee will want to hear more as we enter the next session of 

Congress. Now the Committee is here to listen and to thank the 

witnesses for testifying. 

Let me call on my colleague from Texas, Senator Hutchison. 

STATEMENT OF HON. KAY BAILEY HUTCHISON, 

U.S. SENATOR FROM TEXAS 

Senator HUTCHISON. Well, thank you, Senator Dorgan. I appreciate your calling attention to this issue, and I want to say that it 

3 

is an important issue that we look at because we know that there 

are many advertising opportunities now on the Internet, which is 

a good thing, as the Senator said. It is good for the economy. It is 

also good for business to be able to target advertising and be able 

to have efficient use of the advertising dollars. 

I also think it is helpful to consumers to be able to find the products they are looking for, the services that they are looking for in 

a targeted way, and that provides more free service on the Internet, which is what we all want. So that is the good side of advertising. 

On the other side, we surely need to be informed. Consumers 

need to be informed about what online entities are doing with their 

personal data information, and of course, since so many, especially 

in our rural areas, depend on broadband for commerce, as well as 

health care and education, people are putting more of their personal information online. So I think transparency and disclosure 

are very important. 

I would say I hope we do not charge into legislating in this area 

before we do fully understand what is possible, what is not possible, what is helpful, and what is not helpful, and what would help 

the right type of opportunities but not hinder the overall ways that 

we can have access to advertising. So it is a complicated area and 

one that we ought to look at, fully understand before we rush into 

legislation that could curb our economy. 

I want to say that I am not going to be able to stay. I have to 

be on the floor at 10:30, but I appreciate your calling this hearing 

and I will certainly look at the testimony later. 

Senator DORGAN. Senator Hutchison, thank you very much. 

I share the view. I do not think that there will be a stirring here 

to rush toward some sort of legislative approach. I think, first, it 

is very important that we understand this. There may well need 

to be legislative solutions at some point in the future, but first, I 

think it is a complicated area and we need to understand it. I certainly agree with that. 

Senator Vitter? 

STATEMENT OF HON. DAVID VITTER, 

U.S. SENATOR FROM LOUISIANA 

Senator VITTER. Thank you very much, Mr. Chairman, for calling 

this hearing as well. We examined this issue earlier this year in 

a hearing with other online companies. So I am looking forward to 

the views of these Internet service providers and others on this 

very important issue. 

I agree we need to look at this carefully. We need to attack bad 

behavior. We need to do it in a way that will not be out of date 

tomorrow as technology advances, and I think we need to do it in 

a way that is not technology-specific, picking winners and losers, 

but sets a broad-based policy in a way that can effectively be implemented. 

So I look forward to listening closely to the testimony to figure 

out how we can best accomplish that. Thank you. 

Senator DORGAN. Thank you, Senator Vitter. 

4 

We have four witnesses today. We will, by consent, include their 

entire statements as a part of the permanent record and ask the 

witnesses to summarize their statements. 

First, we will hear from Ms. Dorothy Attwood, who is the Senior 

Vice President for Public Policy and Chief Privacy Officer for AT&T 

Services. Ms. Attwood, thank you for being with us. You may proceed. 

STATEMENT OF DOROTHY ATTWOOD 

SENIOR VICE PRESIDENT, PUBLIC POLICY 

AND CHIEF PRIVACY OFFICER, AT&T INC. 

Ms. ATTWOOD. Thank you very much. Thank you, Senator Dorgan and other Committee Members, for providing AT&T the opportunity to discuss online behavioral advertising and its important 

privacy implications. 

My name is Dorothy Attwood and I am AT&T’s Senior Vice 

President and Chief Privacy Officer. 

Senator Dorgan, AT&T appreciates your leadership on this issue. 

It has fomented a necessary and productive discussion among all 

key stakeholders, and it has encouraged our industry to listen 

closely to our customers and take a careful look at how best to engage in different modes of online advertising. Indeed, you will hear 

today a remarkable consensus about the overriding importance of 

a consumer-focused approach to online advertising and the need to 

ensure that consumers maintain ultimate and effective control over 

their information. 

American consumers benefit immeasurably from our Internet 

ecosystem, which is rich in innovative services and varied content 

information and entertainment. Online advertising is a key component of this ecosystem as it fuels investment and enables many free 

and discounted services and funds today’s vast diversity of Internet 

content. 

But online advertising, especially new forms of highly targeted 

behavioral advertising, also raise important consumer privacy concerns that policymakers and industry must carefully weigh. Setting 

proper policy in this area is crucial to maximizing the consumer 

benefit of a healthy Internet marketplace. 

Online behavioral advertising is the practice of tracking a consumer’s web browsing and search activity across unrelated 

Websites. Notably, both the tracking and the association of the 

websites are largely invisible to the end user and the resulting information is used to create a distinct user profile and deliver highly 

targeted or personalized advertising. It is, indeed, a next generation capability and it can clearly be distinguished from the simple 

and longstanding practice of tracking a consumer’s use of an individual Website or obviously related Websites. 

AT&T does not today engage in online behavioral advertising either through the so-called ‘‘deep packet’’ inspection or any other 

technique. Of course, if done properly, the practice can be valuable 

to consumers and can measurably improve their online experience. 

But we believe just as strongly that it is essential to include strong 

privacy protections in the design of any online behavioral advertising program and that any privacy framework should shed clariVerDate Nov 24 2008 13:55 Apr 06, 2009 Jkt 000000 PO 00000 Frm 00008 Fmt 6633 Sfmt 6633 S:\WPSHR\GPO\DOCS\48450.TXT SCOM1 PsN: JACKIE
5 

fying light on what is today something quite invisible to the consumer. 

Thus, we will engage in online behavioral advertising only after 

validating the various technologies and only after establishing clear 

and consistent methods to ensure the protection of and ultimate 

consumer control over consumer information. Our deployment of 

any online behavioral advertising practice will be governed by the 

imperative of meaningful consent and a consumer-focused privacy 

framework based on the following principles: transparency, customer control, privacy protection, and customer value. 

More specifically, we believe that a forward-looking advertising 

practice requires a forward-looking customer notice and consent 

model. For this reason, AT&T will not use consumer information 

for online behavioral advertising without an affirmative advance 

action by the customer that is based on a clear explanation of how 

the consumer’s action will affect the use of her information. This 

means that a consumer’s failure to act will not result in any collection and use of that consumer’s information for online behavioral 

advertising purposes by default. 

Even though AT&T and most other Internet service providers do 

not engage in online behavioral advertising, make no mistake, this 

practice is well underway today. Already ad networks and search 

engines track and store a vast trove of data about consumers’ online activities, and the technologies they use have evolved just beyond tracking consumers’ web surfing activity at sites at which 

they sell advertising. They now also have the ability to observe a 

user’s entire web browsing experience at a granular level. If anything, this largely invisible practice of ad networks and search engines raise at least the same privacy concerns as do other online 

behavioral techniques that ISPs could employ. 

For this reason, we believe that any privacy framework for online 

behavioral advertising must apply to all entities involved in Internet advertising, including ad networks, search engines, and ISPs. 

A policy regime that applies only to one set of actors will arbitrarily favor one business model or technology over another, but 

most importantly represent only a partial and entirely unpredictable solution for consumers. 

Thus, we urge all entities that engage in online behavioral advertising, including especially those who already are engaging in the 

practice, to join AT&T in committing to a policy of advance, affirmative consumer consent. 

Again, thank you for the opportunity to speak here today, and I 

look forward to your questions. 

[The prepared statement of Ms. Attwood follows:] 

PREPARED STATEMENT OF DOROTHY ATTWOOD, SENIOR VICE PRESIDENT, PUBLIC POLICY AND CHIEF PRIVACY OFFICER, AT&T INC. 

Thank you, Chairman Inouye and Ranking Member Hutchison, for providing 

AT&T Inc. the opportunity to discuss online advertising and, more specifically, the 

issue that has received a good deal of recent attention, so-called online behavioral 

advertising. We trust that this hearing will help the discussion evolve past slogans 

and rhetoric to a more thoughtful examination of the facts and the development of 

a holistic consumer privacy policy framework that all participants in the online behavioral advertising sphere can and will adopt. 

Your interest in these matters surely is warranted. Online advertising fuels investment and innovation across a wide range of Internet activities, and provides the 

6 

1The policy framework that AT&T proposes here is informed by and should complement the 

Online Behavioral Advertising Self-Regulatory Principles issued by staff of the Federal Trade 

Commission in December of last year. Online Behavioral Advertising: Moving the Discussion 

Forward to Possible Self-Regulatory Principles, available at http://www.ftc.gov/05/2007/12/ 

P85900stmt.pdf. 2Letter from Joel Winston, Acting Associate Director, Division of Financial Practices, Bureau 

of Consumer Protection, Federal Trade Commission, to ChristineVarney, Hogan & Hartson, Re: 

DoubleClick Inc. (Jan. 22, 2001)(memorializing closure of FTC staff investigation). 

revenue that enables consumers to enjoy many free and discounted services. Likewise, website publishers make most of their money from advertising, which revenue 

in turn funds today’s vast wealth and diversity of Internet content and information—most of which consumers enjoy, again, for free. On the other hand, online advertising, especially next-generation forms of highly targeted behavioral advertising 

that involve tracking consumer web browsing and search activities, raise important 

consumer-privacy concerns that policymakers and industry must carefully weigh. In 

short, setting proper policy in this area will be crucial to a healthy and growing 

Internet ecosystem that benefits consumers. 

AT&T does not today engage in online behavioral advertising, but we understand 

the uniquely sensitive nature of this practice. We have listened to our customers 

and watched the debate unfold, and are responding by advocating for a consumerfocused framework. As described in more detail herein, the pillars of this framework—transparency, consumer control, privacy protection, and consumer value—can be the foundation of a consistent regime applicable to all players in the online behavioral advertising sphere—including not just Internet Service Providers (‘‘ISPs’’), 

but also search engines and third party advertising networks—that both ensures 

that consumers have ultimate control over the use of their personal information and 

guards against privacy abuses.1

In particular, we believe that effective customer control for online behavioral advertising requires meaningful consent and therefore commit that AT&T will not use 

consumer information for online behavioral advertising without an affirmative, advance action by the consumer that is based on a clear explanation of how the consumer’s action will affect the use of her information. This concept—often generically 

referred to as ‘‘opt-in’’—means that a consumer’s failure to act will not result in any 

collection and use by default of that consumer’s information for online behavioral 

advertising purposes. This affirmative consent model differs materially from the default-based privacy policies that advertising networks and search engines—which already are engaged in online behavioral advertising—currently employ. Given the obvious consumer benefits of such a model, we encourage all companies that engage 

in online behavioral advertising—regardless of the nature of their business models 

or the technologies they utilize—likewise to adopt this affirmative-advance-consent 

paradigm. 

What is Online Behavioral Advertising? 

There is no single, settled definition of online behavioral advertising in statute or 

case law, but the FTC and others have used the term to refer to it as the tracking 

of a consumer’s web search and web browsing activities—by tracking either the person or a particular Internet access device, be it a computer, data-enabled mobile 

phone, or some other communications vehicle—to create a distinct profile of the consumer’s online behavior. In this sense, it can clearly be distinguished from the simple practice of tracking a consumer’s use of an individual website or obviously-related websites (such as those operated under a common trademark, trade name or 

conspicuously disclosed corporate affiliation), which practice does not necessarily 

raise the same privacy concerns as online behavioral advertising but which nonetheless can and should expressly be disclosed to Internet users. Privacy concerns about 

online behavioral advertising are not new—indeed, DoubleClick’s (now a Google subsidiary) use of tracking cookies to collect and use information about consumer web 

browsing activity was the subject of an FTC proceeding in 2000.2 More recently, the 

FTC and Congress have appropriately asked questions about the privacy implications of emerging online advertising businesses that involve the tracking of consumer web browsing and search activity. Thus, consistent with the focus of recent 

public discussion, we consider online behavioral advertising to be: (1) the tracking 

of user web browsing and search activity across unrelated websites, (2) when the 

tracking and association of the websites or their components are largely invisible 

to the user, and (3) the resulting information is used to create a distinct user profile 

and deliver targeted advertising content. 

Online behavioral advertising can take many forms. It can, for instance, involve 

the use by an ISP of technologies to capture and analyze a user’s Internet browsing 

activities and experience across unrelated websites. These more ISP-specific methVerDate Nov 24 2008 13:55 Apr 06, 2009 Jkt 000000 PO 00000 Frm 00010 Fmt 6633 Sfmt 6621 S:\WPSHR\GPO\DOCS\48450.TXT SCOM1 PsN: JACKIE
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3 AT&T does engage in some of the more ordinary and established aspects of online advertising. Like virtually every entity with a retail Internet presence, AT&T tracks usage on its own 

websites, such as att.com, in order to improve the online experience, optimize a particular site’s 

capabilities and ease-of-use, and provide the most useful information to consumers about 

AT&T’s products and services. In addition, like thousands of other businesses that operate 

websites, AT&T does business with advertising networks and has partnered with providers of 

online search. For example, on the AT&T broadband Internet access portal, AT&T makes space 

available for advertising provided by the Yahoo! advertising network, and users of the portal 

may be shown advertising that is based on their activity across sites signed up to the Yahoo! 

advertising network. Also by way of example, we have arranged for the Google search box to 

appear on our my.att.net site. In this regard, then, we are no different than any other website 

publisher. 

odologies are not, however, the only—and certainly are not nearly the most prevalent—forms of online behavioral advertising. Advertising-network technologies have 

evolved beyond solely tracking consumer web surfing activity at sites on which they 

sell advertising. They now also have the ability to observe a user’s entire web browsing experience at a granular level. Techniques include the ad network ‘‘dropping’’ 

third-party tracking ‘‘cookies’’ on a consumer’s computer to capture consumer visits 

to any one of thousands of unrelated websites; embedding software on PCs; or automatically downloading applications that—unbeknownst to the consumer—log the 

consumer’s full session of browsing activity. 

Ad networks and other non-ISPs employ these capabilities at the individual 

browser or computer level and they are as effective as any technique that an ISP 

might employ at creating specific customer profiles and enabling highly targeted advertising. Already ad networks and search engines track and store a vast trove of 

data about consumers’ online activities. Google’s practices exemplify the already extensive use of online behavior advertising, particularly by nonISPs. Google logs and 

stores users’ search requests, can track the search activity by IP address and a cookie that identifies the user’s unique browser, and can even correlate search activities 

across multiple sessions, leading to the creation of a distinct and detailed user profile. Through DoubleClick, Google can drop tracking cookies on consumers’ computers so that whenever the consumer visits websites that contain a display ad 

placed by DoubleClick (which can be for virtually any product or service), the consumer’s web browsing activity can be tracked across seemingly unrelated sites (e.g., 

CNN.com or ESPN.com). Google further has access to enormous amounts of personal information from its registered users, which its privacy policy expressly confirms can be combined with information from other Google services or third parties 

for the ‘‘display of customized content and advertising.’’ And it even scans e-mails 

from nonGmail subscribers sent to Gmail subscribers for contextual advertising purposes. 

Thus, if anything, the largely invisible practices of ad-networks and search engines raise at least the same privacy concerns as do the online behavioral advertising techniques that ISPs could employ, such as deep-packet-inspection, which 

have application beyond mere targeted advertising, including managing network 

congestion, detecting viruses and combating child pornography. In short, the privacy 

and other policy issues surrounding online behavioral advertising are not technology-specific. The relevant touchstones are the manner in which consumer information is tracked and used, and the manner in which consumers are given notice 

of and are able to consent to or prohibit such practices. Those factors are entirely 

technology-neutral. 

AT&T’s Approach to Online Behavioral Advertising 

AT&T does not today engage in online behavioral advertising.3 This is not because 

AT&T sees no value in this next-generation form of online advertising. Indeed, if 

done properly, online behavioral advertising could prove quite valuable to consumers and could dramatically improve their online experiences. We do, however, 

believe it is essential to include strong privacy protections in the design of any online behavioral advertising program, which is why we will initiate such a program 

only after testing and validating the various technologies and only after establishing 

clear and consistent methods and procedures to ensure the protection of, and ultimate consumer control over, consumer information. We further intend to work with 

privacy advocates, consumer privacy coalitions and fellow industry participants in 

a cooperative, multifaceted effort that we trust can and will lead to a predictable 

consumer driven framework in this area. In any event, if AT&T deploys these technologies and processes, it will do so the right way. 

Against this backdrop, AT&T has already listened closely to its customers and 

will adopt meaningful and flexible privacy principles that will guide any effort to 

engage in online behavioral advertising. We summarize this framework as follows: 

8 

• Transparency: Consumers must have full and complete notice of what information will be collected, how it will be used, and how it will be protected. 

• Consumer Control: Consumers must have easily understood tools that will allow 

them to exercise meaningful consent, which should be a sacrosanct precondition 

to tracking online activities to be used for online behavioral advertising. 

• Privacy protection: The privacy of consumers/users and their personal information will be vigorously protected, and we will deploy technology to guard against 

unauthorized access to personally identifiable information. 

• Consumer Value: The consumer benefits of an online behavioral advertising program include the ability to receive a differentiated, secure Internet experience 

that provides consumers with customized Internet advertisements that are relevant to their interests. But we think the future is about much more than just 

customized advertising. Consumers have shown that in a world of almost limitless choices in the content and services available on the Internet, they see great 

value in being able to customize their unique online experience. That is the ultimate promise of the technological advances that are emerging in the market 

today. 

Call to Action 

We believe these principles offer a rational approach to protecting consumer privacy while allowing the market for Internet advertising and its related products and 

services to grow. But, in order for consumers truly to be in control of their information, all entities involved in Internet advertising, including ad networks, search engines and ISPs, will need to adhere to a consistent set of principles. A policy regime 

that applies only to one set of actors will arbitrarily favor one business model or 

technology over another and, more importantly, represent only a partial and entirely 

unpredictable solution for consumers. After all, consumers do not want information 

and control with respect to just a subset of potential online advertising or the tracking and targeting that might underlie those ads. Thus, we urge all entities that engage in online behavioral advertising—including especially those who already engage in the practice—to join AT&T in committing to a policy of advance, affirmative 

consumer consent. 

Senator DORGAN. Ms. Attwood, thank you very much for your 

testimony. 

Next, we will hear from Mr. Peter Stern who is the Chief Strategy Officer for Time Warner Cable. Mr. Stern, you may proceed. 

STATEMENT OF PETER STERN, EXECUTIVE VICE PRESIDENT, 

CHIEF STRATEGY OFFICER, TIME WARNER CABLE 

Mr. STERN. Good morning, Mr. Chairman, Members of the Committee. My name is Peter Stern. I am Executive Vice President and 

Chief Strategy Officer at Time Warner Cable. 

I am pleased to testify before you today and appreciate this Committee’s diligent effort to grapple with the complex and still-evolving Internet advertising marketplace and to assess its impact on 

consumer privacy. 

Presently, Time Warner Cable does not engage in targeted Internet advertising as an ISP or as a Website operator. 

If Time Warner Cable decides to engage in such activities, our 

customers’ privacy will be a fundamental consideration. The protection of subscriber privacy is not only important as a matter of public policy. Our ability to succeed depends on winning and retaining 

the trust of our customers. Accordingly, we support a framework 

that would provide consumers with the opportunity to affirmatively 

consent to receive online targeted advertising. 

We believe that achieving and sustaining our subscribers’ trust 

requires adhering to a privacy framework that addresses four principles: first, giving customers control; second, providing transVerDate Nov 24 2008 13:55 Apr 06, 2009 Jkt 000000 PO 00000 Frm 00012 Fmt 6633 Sfmt 6601 S:\WPSHR\GPO\DOCS\48450.TXT SCOM1 PsN: JACKIE
9 

parency and disclosure; third, safeguarding personal information; 

and fourth, providing customers with value. 

Let me also add, however, that any such framework can only 

truly protect the privacy interests of consumers if it is universally 

adopted by all providers of targeted online advertising. Quite simply, it makes no difference to a consumer whether a targeted online 

ad is based on data collected by an ISP, an ad network, or an applications provider. A framework that leaves any provider uncovered 

would leave all users unprotected. In addition, common rules are 

the only way to ensure all businesses can compete on a level playing field. 

Let me elaborate briefly on the four principles I have mentioned. 

First, customer control means consumers will be able to exercise 

affirmative consent before having their online activities collected 

and used for targeted online advertising. Internet subscribers that 

decline to consent or fail to act should not have their online activities tracked or used for targeted online advertising. Control also 

means that the consent mechanism should be easy to use. Customers should be free to change their election at any time, and 

their election will remain in effect unless they change it. 

Second, transparency and disclosure means ensuring that a customer’s consent to targeted online advertising is informed. This 

means giving Internet users clear and timely notice regarding what 

is collected, how it is used, and what consumers need to do if they 

do not want to participate. And by this, we do not mean fine print. 

We mean prominent and plain English. 

Third, safeguarding information means preventing unauthorized 

access to customers’ personal information. It also means preventing 

disclosure or sale of such information to third parties absent consent of the customer. 

Last, providing value means offering targeted online advertising 

in a manner that enhances the Internet experience for consumers. 

Instead of a barrage of irrelevant ads, consumers can receive ads 

tailored to reflect their interests. Targeted online advertising can 

also be used to protect consumers from seeing ads they do not 

want. Advertising can be a public good when it educates consumers 

about relevant choices. 

Most companies that provide services on the Internet are presently under no obligation to disclose or obtain consent for the collection and use of consumers’ online information. While some provide disclosure and give consumers the ability to opt out, this falls 

short of the principle of consumer control I have articulated. 

Therefore, Time Warner Cable believes that the four principles 

I have outlined should serve as a policy framework that would 

apply to all companies involved in targeted online advertising. 

Time Warner Cable stands ready to work with this Committee and 

other stakeholders to help foster the development and implementation of such a framework. 

I thank the Members of this Committee for the opportunity to 

appear before you today on this important issue, and I would be 

happy to answer any questions you might have. 

[The prepared statement of Mr. Stern follows:] 

10 

PREPARED STATEMENT OF PETER STERN, EXECUTIVE VICE PRESIDENT, 

CHIEF STRATEGY OFFICER, TIME WARNER CABLE

Good morning, Mr. Chairman, Members of the Committee, my name is Peter 

Stern. I am Executive Vice President and Chief Strategy Officer at Time Warner 

Cable, where I am responsible for strategy and planning, including for our Road 

Runner high-speed online service. 

I am pleased to testify before you today and appreciate this Committee’s diligent 

effort to grapple with the complex and still-evolving Internet advertising marketplace and to assess its impact on consumer privacy. 

Presently, Time Warner Cable does not engage in targeted Internet advertising 

as an ISP or as a website operator. 

Should Time Warner Cable decide to engage in such activities, our customers’ privacy will be a fundamental consideration. The protection of subscriber privacy is not 

only important as a matter of public policy, but it is also central to the success of 

our business. The bedrock foundation of our business is our relationship with our 

subscribers. We operate in a highly competitive marketplace, and our ability to succeed depends on winning and retaining the trust of those customers. Accordingly, 

we support a framework that would provide consumers with the opportunity to affirmatively consent to receive online targeted advertising. 

In the context of targeted online advertising, we believe that achieving and sustaining our subscribers’ trust requires adherence to a privacy framework that addresses four principles: first, giving customers control; second, providing transparency and disclosure; third, safeguarding personal information; and fourth, providing customers with value. 

Let me also add, however, that we strongly believe that any such framework can 

only truly protect the privacy interests of consumers if it is universally adopted by 

all providers of targeted online advertising, including ad networks, application providers and ISPs. Quite simply, it makes no difference to a consumer whether a targeted online ad is based on data collected by an ISP, an ad network or an applications provider. A framework that leaves any provider uncovered would leave all 

users unprotected. In addition, a common set of rules protecting consumer privacy 

is the only way to ensure that all businesses that provide online advertising can 

compete and innovate on a level playing field. 

Before I go any further, allow me to clarify our definition of targeted online advertising for the purposes of applying the framework I described. At Time Warner 

Cable, we define it as displaying different online ads to a consumer based on that 

consumer’s behavior on unrelated websites. So, if ads are delivered to a consumer 

based on that consumer’s particular history of visits to multiple unrelated websites, 

that’s targeted online advertising. 

On the other hand, delivering relevant ads to a consumer based on their behavior 

on an individual website (or group of related websites) is not targeted online advertising. For example, if you go to Apple’s website and search for an iPod, and Apple 

delivers ads and promotions for iPods while you are still on the Apple website, that’s 

not targeted online advertising. That’s being responsive to what you asked for, when 

and where you wanted it. It becomes targeted online advertising, however, if this 

information is retained in order to deliver ads for iPods and other portable music 

players while you are visiting unrelated websites. 

Let me elaborate briefly on the four principles I’ve mentioned. 

First, customer control means consumers will be able to exercise affirmative consent to having their activities collected and used for targeted online advertising. 

Internet subscribers that decline to consent or fail to act should not have their online activities tracked or used for targeted online advertising. Control also means 

that the consent mechanisms should be easy to use, to ensure that customers are 

free to change their election at any time, and that their election will remain in effect 

unless they change it. 

Second, transparency and disclosure means ensuring that a customer’s consent to 

targeted online advertising is informed. This means giving Internet users clear and 

timely notice regarding what type of online usage information is tracked and collected, how that information is used to provide targeted online advertising, and 

what steps consumers can take should they decline to participate. And by this, we 

don’t mean fine print. We mean prominent and plain English. 

Third, safeguarding personal information means preventing unauthorized access 

to customers’ personal information. It also should mean preventing disclosure or 

sale of such information to third parties absent consent of the customer. We also 

believe that policymakers and the public should continue to discuss whether there 

are categories of particularly sensitive information, such as personal medical inforVerDate Nov 24 2008 13:55 Apr 06, 2009 Jkt 000000 PO 00000 Frm 00014 Fmt 6633 Sfmt 6621 S:\WPSHR\GPO\DOCS\48450.TXT SCOM1 PsN: JACKIE
11 

mation, that should be entirely off limits to targeted online advertising or subject 

to special controls. 

Last, providing value means offering targeted online advertising in a manner that 

enhances the Internet experience for consumers. Time Warner Cable firmly believes 

that targeted online advertising can benefit consumers. Instead of a barrage of irrelevant ads, subscribers can receive information about services and offerings tailored 

to reflect their interests. Targeted online advertising can also be used to protect consumers from seeing ads they don’t want. Advertising can be a public good, when it 

educates consumers about relevant choices. Properly implemented, technology can 

help advertising achieve this potential, possibly even increasing the number of ads 

consumers want to see. 

In addition, targeted online advertising provides important benefits for advertisers and providers of Internet applications and services. Revenues from such advertising can offset the costs of providing services to consumers, and can allow businesses to offer services at discounts or even without direct payment from end users. 

In this manner, targeted online advertising can deliver value to consumers while 

helping to preserve and promote access to and enjoyment of the rich diversity of the 

Internet. 

Most companies that provide services on the Internet are presently under no obligation to disclose, or obtain consent for, the collection and use of consumers’ online 

usage information. And in the case of some of the largest ad networks and applications providers, the amount of information such companies possess about consumers 

dwarfs that obtained by ISPs. 

It is certainly true that many providers of targeted online advertising already voluntarily disclose the extent to which they collect and use data about consumers. 

And some may also provide consumers the ability to ‘‘opt out’’ of participating in 

such an arrangement. But the extent of such disclosure varies greatly and is often 

opaque; and the process for opting out can be complicated, and in any case falls 

short of the principle of consumer control I have articulated. 

Therefore, Time Warner Cable believes that the four principles I have outlined— 

customer control, transparency and disclosure, safeguarding personal information, 

and providing value—should serve as the cornerstone of a uniform policy framework 

that would apply to all companies involved in targeted online advertising. Time 

Warner Cable stands ready to work with this Committee and other stakeholders to 

help foster the development and implementation of such a framework. 

I thank the Members of this Committee for the opportunity to appear before you 

today on this important issue, and I would be happy to answer any questions you 

might have. 

Senator DORGAN. Mr. Stern, thank you very much for being with 

us. 

Next, we will hear from Mr. Tom Tauke, the Executive Vice 

President of Public Affairs, Policy and Communications at Verizon 

Communications. Mr. Tauke, you may proceed. 

STATEMENT OF THOMAS J. TAUKE, 

EXECUTIVE VICE PRESIDENT, VERIZON 

Mr. TAUKE. Verizon is not engaged in behavioral advertising, but 

we are very much aware of the concerns that have been expressed 

by consumers and this Committee about some of the practices that 

other Internet players are engaged in to send targeted advertising 

to consumers. Therefore, we have focused attention within Verizon 

on what policies and practices related to online advertising we 

should follow to keep faith with our own customers. And we’ve 

looked at what practices would work for the entire on-line industry. 

Perhaps it would be useful if I just outlined the framework of our 

thinking. 

First, we focused on the consumer and tried to look at the issue 

from his or her perspective. It seemed clear to us that consumers 

want information so they know what is going on. They want to be 

in control of their online experience, and they want to be able to 

12 

choose whether or not their online usage is tracked and used to 

send them targeted advertising. 

Second, we concluded that any policy governing online advertising should be centered around the notion of meaningful consent 

by the consumer. We had a lot of discussion about opt in and opt 

out. We concluded that those terms are not particularly meaningful 

in the online world. Most consumers, I suspect, are like me. We are 

trying to do something online. The screen pops up. We hit ‘‘OK’’ or 

‘‘continue’’ and move on, not really aware of what we just opted 

into. 

So we focused on the concept of meaningful consent and what 

that means. Our sense is that meaningful consumer consent in this 

context requires three elements. 

One, transparency. That means conspicuous and clearly explained disclosure to consumers about what types of data are collected for what purposes and how it will be used. 

Affirmative choice is the second principle. With knowledge of 

what they are choosing, consumers would have to affirmatively act, 

affirmatively agree to permit tracking of their online activity. 

And third, consumer control. Consumers should have the ongoing 

ability to change their choice. 

Senator Dorgan, you put this pretty well in a previous hearing 

on this issue when you talked about a consumer going into the 

mall. I believe it was your daughter. If you walk into the store and 

the store keeps track of what you are doing and buying so they can 

bill you at the end, you know, you probably think that is OK. And 

if you do not like it, you walk out. But if someone starts following 

you around the mall tracking your activity from store to store, you 

would feel pretty uneasy about that, I suspect, unless you had invited them along. 

Using that analogy, what we believe is that before anyone follows 

a consumer around online to target them for advertising, that the 

consumer must know what is going on, must make an affirmative 

choice to permit that activity, and should be able to turn around 

at any time and say, I do not want you following me around anymore. 

We have been talking to other companies engaged in online services, and we believe that there is a lot of support, as evidenced here 

today, for the recommendations we are making in the testimony I 

submitted to the Committee. Really, everyone should embrace policies that put the consumer in control of the online experience, and 

from consumers’ perspective, it really does not matter who is doing 

the behavioral advertising, whether it is companies providing their 

browser or their search engine, their access, or any other online 

service. All online players should protect the privacy of online 

users. 

The advertising industry, importantly, also appears to be interested in establishing a set of consistent best practices. That industry has a pretty good record of self-policing, with the Federal Trade 

Commission helping ensure that the advertising industry’s best 

practices are enforced to protect consumers. 

With that model in mind, we are reaching out to the online industry to see if we can develop a set of best practices for online advertising that will protect consumers. And we will work with this 

13 

Committee and other interested organizations to figure out how we 

can make sure the consumers feel secure and in charge when they 

are online, that the rapidly advancing communications and information processing technology is used to enhance consumers’ online 

experience, not spoil it, and that the Internet continues to open 

new worlds of opportunities for each of us. 

Thank you very much. 

[The prepared statement of Mr. Tauke follows:] 

PREPARED STATEMENT OF THOMAS J. TAUKE, EXECUTIVE VICE PRESIDENT, VERIZON

Chairman Inouye, Ranking Member Hutchison and Members of the Committee: 

thank you for the opportunity to discuss the important concerns and perspectives 

surrounding consumer privacy in the area of online advertising. 

Today, more than 60 million American homes are connected to the Internet via 

broadband, and the wide range of content, services, and applications online—most 

offered for free—draws more people online every day. 

While Verizon does not rely on online advertising as a significant source of revenue, we recognize that it has been a key business model that has helped make the 

Internet a growth engine for the U.S. economy. 

Yet, using consumers’ web-surfing data to foster targeted online advertising raises 

complex and important issues surrounding online privacy. Consumers and policymakers want to understand what personal information is being collected and used 

for advertising purposes. They want to know what privacy and consumer protections 

are in place, and what choices are available to participate—or not—in behavioral 

advertising models. 

In a rapidly changing and innovative environment like the Internet, maintaining 

consumer trust is essential. It is critical that consumers understand what forms of 

targeted online advertising their service providers and favorite websites employ. If 

certain practices cause consumers to believe that their privacy will not be protected, 

or their preferences won’t be respected, they will be less likely to trust their online 

services, and the tremendous power of the Internet to benefit consumers will be diminished. So, maintaining consumer trust in the online experience is critical to the 

future success of the Internet. 

With that in mind, let me begin by describing the online advertising techniques 

Verizon uses today over its wireline networks. 

Verizon’s online advertising involves the practices commonly accepted throughout 

the Internet, such as the use of cookies or ad delivery servers to provide advertising 

that is limited to users of Verizon’s own services or websites. We also provide adsupported search results to help consumers find the websites they are looking for 

when they mistype an address. These practices, which are neither new nor unique, 

improve consumers’ interaction with our websites and services, and increase the relevance of the advertising displayed to our customers or to visitors of our sites. 

One technology that has received attention of late is ‘‘packet inspection.’’ To be 

clear, Verizon has not used—and does not use—packet inspection technology to target advertising to customers, and we have not deployed the technology in our 

wireline network for such purposes. 

Packet inspection can be a helpful engineering tool to manage network traffic and 

enable online services and applications consumers may wish to use. The perceived 

problem with ‘‘packet inspection’’ is not the technology. Many useful technologies 

can be used for nefarious purposes. The problem arises if packet inspection is used 

to inappropriately track customers’ online activity without their knowledge and consent and invade their personal privacy. 

In fact, any technology that is used to track and collect consumer online behavior 

for the purposes of targeted advertising—regardless of which company is doing the 

collecting—should only be used with the customer’s knowledge and consent in accordance with the law, a company’s specific privacy policies, and the privacy principles outlined below. 

Protecting our customers’ privacy has long been, and will continue to be, a priority 

at Verizon. We are committed to maintaining strong and meaningful privacy protections for consumers in this era of rapidly changing technological advances. We are 

strong proponents of transparency and believe that consumers are entitled to know 

what kinds of information we collect and use, and should have ready access to effective tools that allow them to control the use of that information. 

At Verizon we have worked to craft—and communicate to our customers—responsible policies aimed at protecting online privacy. 

14 

We can commit—and believe that all companies should commit—to a set of best 

practices in the area of online behavioral advertising. The principles and best practices should apply to all online companies regardless of their technology or the platform used. The principles underlying the consumer protection practices we support 

are these: 

First, meaningful consent. 

Verizon believes that before a company captures certain Internet-usage data for 

targeted or customized advertising purposes, it should obtain meaningful, affirmative consent from consumers. Meaningful consent requires: (1) transparency, (2) affirmative choice, and (3) consumer control. 

Transparency involves conspicuous, clearly explained disclosure to consumers as 

to what types of data are collected and for what purpose that data is being used, 

how that data is retained and for how long, and who is permitted access to the data. 

Consumers would then be able to use these clear explanations to make an affirmative choice that their information can be collected and used for online behavioral 

advertising. Importantly, a consumer’s failure to consent should mean that there is 

no collection and use of that consumer’s information for online behaviorally targeted 

advertising based on tracking of the consumer’s Internet usage. 

Finally, consumer control means that consumers have an ongoing opportunity to 

make a different choice about behavioral advertising. In other words, should consumers at some later time choose not to participate in the behavioral advertising, 

there are equally clear and easy-to-use instructions to make that change. That preference should remain in effect unless and until the consumer changes it. 

Second, security practices. 

Any company engaged in tracking and collecting consumer online behavioral information must have appropriate access, security, and technological controls to 

guard against unauthorized access to any personal information. 

Third, safeguards for sensitive information. 

Special attention must be given to the protection of information of a sensitive nature (e.g., accessing medical websites). This information should not be collected and 

used for online behavioral advertising unless specific, affirmative consent, and customer controls are in place to limit such use. Specific policies may be necessary to 

deal with this type of information. 

Consistent with our long-standing policies and practices, Verizon also believes 

that the content of communications, such as e-mail, instant messages, or VoIP calls, 

should not be used, analyzed, or disclosed for purposes of Internet-based targeted 

advertising. 

Fourth, certification. 

It is critical that all participants in online advertising—ad networks, publishers, 

search engines, Internet service providers, browser developers and other application 

providers—commit to these common sense principles and best practices through a 

broad-based, third party coalition. To achieve this, we plan to work with stakeholders in the Internet and advertising arenas, including other companies, industry 

groups and policy organizations. 

The focus of this coalition and the principles should be the protection of consumers, not the technology or applications that happen to enable the data collection. 

Widespread and uniform adoption of principles will greatly enhance the public trust, 

address expressed privacy concerns regarding web tracking practices, and serve as 

a foundation for further discussion with policymakers and consumer groups. 

We believe that companies engaged in online behavioral advertising should agree 

to participate in a credible, third-party certification process to demonstrate to consumers that they are doing what they say with regard to the collection and use of 

information for online behavioral advertising. This process would confirm that companies are complying with and respecting consumers’ expressed choices regarding 

such data collection. 

We believe a framework such as this is a rational approach that protects consumer privacy, while allowing the market for Internet advertising and its related 

products and services to grow. 

Should a company fail to comply with these principles, we believe the Federal 

Trade Commission has authority over abuses in the privacy area and can take appropriate measures against companies that intentionally violate applicable consumer protection laws. 

We hope to use the next few months to work with all players in the Internet space 

to create and agree to live by industry best practices for online advertising. 

Thank you. 

15 

Senator DORGAN. Mr. Tauke, thank you very much for your testimony. 

Finally, we will hear from Ms. Gigi Sohn, the President and CoFounder of Public Knowledge. Ms. Sohn, you may proceed. 

STATEMENT OF GIGI B. SOHN, PRESIDENT, 

PUBLIC KNOWLEDGE 

Ms. SOHN. Senator Dorgan, Members of the Committee, thanks 

for giving me the opportunity today to testify on behalf of Internet 

users. 

I would like to focus my comments on the growing use of technologies known as deep packet inspection, or DPI. 

The use of DPI technology has serious implications for the privacy rights of Americans. Public Knowledge, in partnership with 

Free Press, has been analyzing these technologies and their impact 

on both privacy and an open Internet. Our organizations published 

a white paper entitled NebuAd and Partner ISPs: Wiretapping, 

Forgery, and Browser Hijacking, which examined the technical and 

policy aspects of DPI. I applaud the Committee for its scrutiny of 

the use of these technologies. 

Simply put, DPI is the Internet equivalent of the Postal Service 

reading your mail. While a postal worker might read your mail for 

any number of reasons, the fact remains that your letter is being 

read by the very person whose job it is to deliver it. 

When you use the Internet for web browsing, e-mail, or any other 

purpose, the data you send and receive is broken up into small 

chunks called packets. These packets are wrapped in envelopes 

which, much like paper envelopes, contain addresses for both the 

sender and the receiver, though they contain little information 

about what is inside. 

Until recently, when you handed that envelope to your ISP, the 

ISP simply read the address, figured out where to send the envelope, and handed it off to the proper mail carrier. 

Now we understand that some ISPs are opening these envelopes, 

reading their contents, and keeping varying amounts of information about the communications inside for their own purposes. In 

many cases, ISPs are actually passing copies of the envelopes on 

to third parties who, in turn, read and make use of that information. For the most part, customers are not aware that their ISPs 

are engaging in this behavior. The end result is much like if the 

Postal Service were to open your letter, photocopy it, hand that 

copy to a third party, and then reseal the letter so that you would 

never know it had been opened in the first place. 

So far, we have seen ISPs like Comcast use DPI as a means to 

identify and block certain types of Internet traffic, in violation of 

the FCC’s Internet policy statement. We have also seen advertising 

companies like NebuAd use DPI to collect browsing histories, online habits, and other potentially personal information about users 

in order to display advertisements targeted to a specific user’s interests. 

The very nature of DPI raises grave privacy concerns. 

As a result, when evaluating an implementation of DPI, there 

are three basic questions that must be answered in order to assess 

both the impact on the user’s privacy and the acceptability of the 

16 

use of the technology in question. First, what purpose is the collected data being used for? Second, how is the data collected and 

utilized? Third, how is affirmative informed consent obtained? 

Given the power of DPI and the scope of its possible uses, it is 

critical that we establish industry guidelines and legal protections 

for users. And while the use of personal data by web service providers is not the focus of today’s hearing, such uses raise separate, 

yet important privacy questions. 

Thus, any solution should strive to be comprehensive in scope 

and ensure that the basic principles of privacy protection are applied across the entire Internet ecosystem. These protections must 

ensure, first, that the purpose of the use of consumer data is one 

that is consistent with users’ privacy expectations; second, that the 

amount and type of data collected is narrowly tailored to the proposed use and that the data is not kept or disseminated to third 

parties past what is necessary; and third, that customers have access to and actually receive adequate information about the proposed use and have affirmatively and actively consented to any 

practices that might violate their privacy expectations. 

To achieve these goals, Congress should pass legislation that encapsulates these requirements and makes clear that the FCC has 

the power to enforce them. 

Even though the Communications Act aims to provide comprehensive privacy protection for users of all communications technologies, gaps in the law have allowed the privacy of some Internet 

users to fall through the cracks. The time has now come to address 

these inequalities and guarantee the right to privacy for all Internet users. 

In closing, I want to make one extra comment about the legislation. I want to commend the ISPs to my right for adopting the principles they have announced today, transparency, control, privacy 

protection, consumer value. But the problem is that the ISPs that 

are not here are the ones that use NebuAd and the ones that told 

Representative Markey and Representative Barton that they 

thought that they were acting within the law. And that is why I 

believe you need comprehensive legislation to ensure that all ISPs 

and not just the good guys are protecting users’ privacies. 

Public Knowledge is eager to work with the Committee to craft 

privacy legislation that will protect all Internet users. 

I look forward to your questions. 

[The prepared statement of Ms. Sohn follows:] 

PREPARED STATEMENT OF GIGI B. SOHN, PRESIDENT, PUBLIC KNOWLEDGE

Chairman Inouye, Ranking Member Hutchison and Members of the Committee, 

thank you for giving me the opportunity to testify about broadband providers and 

consumer privacy. I’d like to focus today on the growing use of the collection of technologies known as ‘‘Deep Packet Inspection,’’ or DPI, which has immense implications for the privacy rights of the American public. Over the past several months, 

Public Knowledge, in partnership with Free Press, has been analyzing these technologies and their impact on privacy and an open Internet. In June, our organizations published a white paper entitled NebuAd and Partner ISPs: Wiretapping, Forgery and Browser Hijacking, which examined the technical and policy aspects of 

17 

1 I would like to thank Public Knowledge’s Equal Justice Works Fellow Jef Pearlman, Policy 

Analyst Mehan Jayasuriya, and Law Clerk Michael Weinberg for assisting me with this testimony. 2See Associated Press article, ‘’ Comcast blocks some Internet traffic′′, (October 19, 2007), 

available at http://www.msnbc.msn.com/id/21376597. 3See Free Press and Public Knowledge, Formal Complaint of Free Press and Public Knowledge 

Against Comcast Corporation for Secretly Degrading Peer to Peer Applications, (November 1, 

2007), available at http://www.publicknowledge.org/pdf/fplpklcomcastlcomplaint.pdf [hereinafter Comcast Complaint]. 4See Federal Communications Commission, Memorandum Opinion and Order (August 1, 

2008), available at http://hraunfoss.fcc.gov/edocslpublic/attachmatch/FCC–08–183A1.pdf. 5See FCC, Policy Statement, (August 5, 2005), available at http://www.publicknowledge.org/ 

pdf/FCC–05–151A1.pdf. 6See Comcast Corporation, Attachment A: Comcast Corporation Description of Current Network Management Practices, (September 19, 2008), available at http://downloads.comcast.net/ 

docs/AttachmentlAlCurrentlPractices.pdf. 7 Representative Edward J. Markey and Representative Joe Barton, Letter to Neil Smit, President and CEO, Charter Communications (May 16, 2008), available at http://markey.house.gov/ 

docs/telecomm/letterlcharterlcommlprivacy.pdf. 8 Center for Democracy and Technology et al., Letter to Representatives Markey and Barton 

(June 6, 2008), available at http://www.cdt.org/privacy/20080606markeybarton.pdf. 9See Public Knowledge and Free Press, Knobbed and Partner ISPs: Wiretapping, Forgery and 

Browser Hijacking (June 18, 2008) available at http://www.publicknowledge.org/pdf/nebuadreport–20080618.pdf. 

DPI. I applaud the Committee for its continued scrutiny of the use of these technologies.1

I. Introduction 

Today’s hearing on consumer privacy comes in the wake of two high-profile online 

consumer privacy violations, both of which involved the use of Deep Packet Inspection (DPI) technology on an Internet Service Provider’s (ISP) network. 

The first instance came to light in October 2007, when an Associated Press report 

revealed that Comcast was interfering with its customers’ BitTorrent traffic.2 The 

report confirmed earlier tests conducted by independent network researcher Robb 

Topolski, who found that Comcast was analyzing its users’ web traffic in order to 

determine the types of applications and protocols being used. The company then 

used a technique called ‘‘packet spoofing’’ to delay, degrade and in some cases, block 

traffic that was identified as being used for BitTorrent, a popular peer-to-peer file 

sharing protocol. Public Knowledge and Free Press filed a formal complaint with the 

FCC in November 2007, calling for the Commission to open a formal investigation 

into the ISP’s practices.3

In January 2008, the FCC announced that it had opened a formal investigation 

into Comcast’s blocking of BitTorrent traffic. This investigation concluded in August 

2008 with the FCC upholding the Public Knowledge and Free Press complaint and 

reprimanding Comcast for its degradation of its users’ traffic. In its ruling against 

Comcast,4 the FCC ordered the company to stop blocking BitTorrent traffic and to 

develop a new set of network management practices that did not violate the FCC’s 

Broadband Policy Statement.5 In its letter of response to the FCC, Comcast confirmed that it had used DPI equipment from the Sandvine Corporation in order to 

identify and block BitTorrent traffic.6

The second instance surfaced in May 2008, when it was revealed that various regional ISPs had contracted with Knobbed, a company that provided highly targeted 

behavioral advertising solutions using DPI equipment. In test deployments of this 

technology, all of the traffic traveling over an ISP’s network was routed through a 

DPI appliance which collected data on specific users, including websites visited, 

terms searched for and services and applications used. This data was then sent to 

Knobbed, which in turn, used the data to create detailed user profiles. These profiles 

were used to display highly targeted advertisements, which were dynamically displayed to the user as he or she surfed the Web. 

In May 2008, Representatives Edward Markey (Chairman, Subcommittee on Telecommunications and the Internet) and Joe Barton (Ranking Member, Senate Committee on Energy and Commerce) sent a letter to Knobbed,7 asking the company 

to put its pilot tests on hold, pending an investigation into the company’s practices. 

A coalition of 15 consumer advocacy and privacy groups publicly voiced their support for this letter and urged the Congressmen to continue their investigation of 

Knobbed and other behavioral advertising companies.8 In June 2008, Public Knowledge and Free Press released a technical analysis of Knobbed’s behavioral advertising system, authored by networking researcher Robb Topolski.9 The report revealed that Knobbed and its partner ISPs repeatedly violated the privacy of users, 

with little or no notification that DPI equipment was being used. Following the reVerDate Nov 24 2008 13:55 Apr 06, 2009 Jkt 000000 PO 00000 Frm 00021 Fmt 6633 Sfmt 6621 S:\WPSHR\GPO\DOCS\48450.TXT SCOM1 PsN: JACKIE
18 

10See John D. Dingell (Chairman, Senate Committee on Energy and Commerce), Joe Barton 

(Ranking Member, Senate Committee on Energy and Commerce), Edward J. Markey (Chairman, 

Subcommittee on Telecommunications and the Internet), Cliff Stearns (Ranking Member, Subcommittee on Telecommunications and the Internet), Letter to ISPs (Aug. 1, 2008), available at 

http://markey.house.gov/docs/telecomm/letterldpil33lcompanies.pdf. 

lease of the report, the House Committee on Energy and Commerce convened a 

hearing on the topic of DPI, wherein Knobbed CEO Bob Dykes was asked to testify. 

On August 1, 2008, the House Committee on Energy and Commerce followed up 

with a letter to 33 ISPs and software companies asking for details regarding how 

they were using DPI and whether and how they were disclosing those uses to their 

customers.10 As a result of the Congressional scrutiny, all of Knobbed’s ISP partners, including WOW! (Wide Open West), CenturyTel, Charter, Bresnan and 

Embarq, have decided to put a hold on their test deployments with Knobbed. In 

September 2008, Bob Dykes announced that he was leaving Knobbed and following 

his departure, the company announced that it was abandoning its behavioral advertising initiatives, in favor or more traditional advertising technologies. 

II. Deep Packet Inspection 

To put it simply, Deep Packet Inspection is the Internet equivalent of the postal 

service reading your mail. They might be reading your mail for any number of reasons, but the fact remains that your mail is being read by the people whose job it 

is to deliver it. 

When you use the Internet for web browsing, e-mail or any other purpose, the 

data you send and receive is broken up into small chunks called ‘‘packets.’’ These 

packets are wrapped in envelopes, which, much like paper envelopes, contain addresses for both the sender and the receiver—though they contain little information 

about what’s inside. Until recently, when you handed that envelope to your ISP, the 

ISP simply read the address, figured out where to send the envelope in order to get 

it to its destination, and handed it off to the proper mail carrier. 

Now, we understand that more and more ISPs are opening these envelopes, reading their contents, and keeping or using varying amounts of information about the 

communications inside for their own purposes. In some cases, ISPs are actually 

passing copies of the envelopes on to third parties who do the actual reading and 

use. In others, ISPs are using the contents to change the normal ways that the 

Internet works. And for the most part, customers are not aware that their ISPs are 

engaging in this behavior—much like if the postal service were to open your letter, 

photocopy it, hand that copy to a third party and then re-seal the letter, so that 

you would never know it had even been opened in the first place. 

III. The Privacy Implications of DPI 

It should be clear that the very nature of DPI technology raises grave privacy concerns. An ISP, by necessity, sees every piece of data a user sends or receives on the 

Internet. In the past, ISPs had little incentive to look at this information and the 

related privacy concerns provided a strong deterrent against doing so. However, now 

that technology is widely available to make use of and monetize this information, 

companies are exploring the limits of what they can do permissibly. 

When evaluating an implementation of DPI technology, there are three basic 

questions that must be answered in order to assess both the impact on a user’s privacy and acceptability of use of the technology in question: 

1. Purpose: What purpose is the collected data being used for? 

2. Collection: How is the data collected and utilized? 

3. Consent: How was affirmative informed consent obtained? 

An understanding of these questions can inform legislators and policymakers in 

the formation of policies, which will adequately protect users of Internet connections 

and services. The uses for DPI are myriad, and most raise serious privacy concerns, 

but each use should be measured individually against a comprehensive privacy policy. 

It is also important to note that there are two parties to any Internet communication. In almost all cases, the party on the other end of a user’s line will have no 

meaningful ability at all to know what kind of monitoring is being employed by that 

user’s ISP or what is being done with the collected data, and will have no opportunity at all to give or to deny consent. For example, if I send you an e-mail and 

my ISP is using DPI to read the contents of my e-mails, your privacy has just been 

violated without your knowledge or consent. Any comprehensive privacy policy that 

addresses technologies like DPI must take into account not only the privacy rights 

19 

of an ISP’s customers, but also those of anyone who communicates with these customers. 

A. Purpose 

Given DPI’s potential to be used as an intrusive tool, we must first ask why the 

user’s traffic is being collected or analyzed at all. Is the use of DPI integral to the 

functioning of the network or is the technology simply being used to provide the ISP 

with an additional revenue stream? Does the technology in question primarily benefit the ISP’s bottom line, or does it give direct benefits to the customer’s use of the 

Internet? Is it used to protect users or the integrity of the network, or simply to 

offer new or improved additional services? 

Not all uses of DPI are inherently problematic. The first widespread uses of DPI 

were for security purposes: to stop malicious programs like viruses and worms from 

passing from one infected computer to another over the Internet. However, as seen 

in the recent complaint and decision against Comcast at the Federal Communications Commission (FCC), DPI can also be used to engage in impermissible, discriminatory network management practices. Taken to an extreme, we can even imagine 

a future where DPI is used to record and disseminate every single move a user 

makes on the Internet—from web browsing, e-mail and instant messaging to VoIP 

phone calls and video chats—to the ISP’s own business advantage. 

Understanding the purpose of DPI use is the first step to understanding whether 

that use will violate a user’s expectations of privacy. 

B. Collection 

After we understand the purpose of a particular use of DPI, we can analyze how 

the data is collected and used toward that purpose. Is the user’s data being collected 

by the ISP for its own use, or is it being passed to a third party with no connection 

to the user? Is all of the user’s data collected, or a smaller subset of the data? Is 

the amount collected narrowly tailored to achieve the stated purpose, or broader 

than necessary, or is the amount of data actually used smaller than that collected? 

It is important to note here that we should evaluate both the amount of data 

which reaches the party using it, and the amount of that data which is used. This 

is because additional data that is sent to a third party provides more opportunity 

for abuse of user privacy—even if that third party later chose to discard some of 

the more personal information. For instance, even though companies like Knobbed 

may choose to ignore the personal medical records or e-mails of its partner’s customers, they were provided the data to do exactly that. This problem is compounded 

by the fact that an ISP or partner must engage in DPI to even discover what type 

of data is being transmitted, thereby possibly violating the user’s privacy before any 

decision is made regarding what is to be done with the data. 

It is also necessary to identify the ways in which the collected data might be tied 

to the user’s actual identity. Is the data obtained using DPI explicitly tied to data 

obtained through other means—for example, the ISP’s billing information, demographic information, or personal information stored on a third-party website? Can 

the collected data be later aggregated with this type of information? Will the data 

itself contain personally identifying information (PII), such as names, addresses, 

and credit card information submitted to websites? These questions are important 

because if the data in question contains PII or if it is later connected with other 

user data, the privacy implications are multiplied. 

Implicit in the data collection question are also questions about data storage. Is 

the collected data kept by the party using it? If so, for how long? Is it kept in its 

original, complete form, or in some type of summary? Is any PII kept with the 

stored data? 

Understanding what and how data is collected and how well that comports with 

the stated purpose of the collection is necessary to evaluating whether the collection 

will violate users’ privacy expectations. 

C. Consent 

No inspection of a user’s data will be acceptable without that user’s affirmative, 

informed consent or law enforcement obligations. To ensure this is obtained, we 

must evaluate both how users are notified of the ways in which their ISP and its 

partners intend to use DPI, and the method by which those users affirmatively consent (or decline to consent) to those uses. To do this, we must ensure that before 

a user’s data is inspected, the user actually receives complete, useful information, 

and that the user knowingly and affirmatively assents to the stated uses. 

Are the answers to the above questions about purpose and collection accessible 

for users, and complete in the information they divulge? If any third parties are involved in the monitoring, are their identities provided for the user? Are the answers 

written so that the average user can make sense of them? Are the policies in quesVerDate Nov 24 2008 13:55 Apr 06, 2009 Jkt 000000 PO 00000 Frm 00023 Fmt 6633 Sfmt 6621 S:\WPSHR\GPO\DOCS\48450.TXT SCOM1 PsN: JACKIE
20 

11 All 33 response letters are available at the House Energy and Commerce Committee’s Subcommittee on Telecommunications and the Internet website at http://energycommerce.house 

.gov/Pressl110/080108.ResponsesDataCollectionLetter.shtml. 12See, e.g., Response Letters of AT&T, Verizon, and Time-Warner. 13See, e.g., Response Letters of WOW!, Charter Communications, Knology, and CenturyTel. 14See Response Letter of Charter Communications 2. 15See Response Letter of Knology 1. 16See Response Letter of Knology 2. 

tion detailed in a place and manner that ensures that the user is likely to read 

them? Is the user actively notified of the presence of and changes to policies and 

monitoring activities, or are changes made to web pages and written into the Terms 

of Service—without any notification to the user? Without accurate and easily understandable information that a user is actually aware of, that user cannot make informed choices about how best to manage his or her privacy online. 

Finally, what is the process by which users agree (or decline to agree) to the use 

of these technologies? Are they subject to DPI before they receive meaningful notice 

of its use, or is the user required to take an affirmative action before his or her data 

is recorded or analyzed? Is the information and the action specific to the monitoring 

activities, or is it hidden in a larger ‘‘Acceptable Use Policy,’’ ‘‘End User License 

Agreement,’’ or other document? Does the user have the meaningful ability to 

change his or her choice later? Is the user actively offered a periodic chance to withdraw consent, or is he or she only asked once? And is the option not to consent a 

real one, without crippling or disabling of the user’s service as the only alternative? 

Without meaningful, informed, affirmative consent on the part of the user, personal data should not be used for any purpose that is not necessary to providing 

basic Internet service. 

IV. ISP Disclosures 

In response to Chairman Dingell and Ranking Member Barton’s letter, 33 ISPs 

and software companies described whether and how they were using DPI and 

whether and how they were disclosing those uses to their customers.11 These responses are helpful in understanding how, to date, the above three questions have 

been answered unsatisfactorily. 

Carriers that responded to the letter fell into two basic camps. The first group 

of ISPs did not employ Knobbed’s services and did not use any similar DPI equipment. These ISPs generally had not deployed any technologies that could track individual users’ browsing habits or correlate advertising information with personal information possessed by the ISP.12

The second camp contained those ISPs who performed trials of or deployed thirdparty DPI-based behavioral advertising systems.13 Importantly, these ISPs generally did not inspect user data themselves, but passed it off to their partners for 

analysis. According to these ISPs, they were assured that measures were in place 

to ensure that those partners did not retain medical information, personal data, emails, or other types of especially sensitive data.14 Also, all of these ISPs stated that 

they and Knobbed did not tie the tracked Internet data to personal customer data 

already known to the ISP (billing information, etc.).15

However, as a technical matter, the personal data embedded in a user’s Internet 

communications was handed off to the ISP’s partners, when the ISP itself is actually 

responsible for safeguarding its users data. In some cases, the identity of the partner was not divulged to the user. These partners had no direct interactions with 

the user, meaning that final control of what data was used and how rested not with 

the user or even the ISP, but with this third party. To return to the postal service 

analogy, it is as if the ISPs photocopied users’ letters and handed these copies to 

third parties, who agreed to only write down which commercial products were mentioned in the letters, and not anything else that someone might consider sensitive. 

However, the decision as to what, exactly, should be considered ‘sensitive,’ is not 

made by the user but rather, by this third-party company. 

Customer notification and consent varied from ISP to ISP, but there were significant trends. ISPs generally posted modified terms of service and often updated the 

‘Frequently Asked Questions’ section on their websites, but usually declined to directly contact users or call attention to the significance of the new service. Knology, 

for instance, updated their Customer Service Agreement on their website, which is 

presented to new users, but apparently made no other attempt to draw attention 

to the change.16

The level of detail in the disclosures also fell far short of the minimum that is 

necessary for customers to make an informed decision. For example, CenturyTel 

sent an e-mail informing users only that it had ‘‘updated its Privacy Policy conVerDate Nov 24 2008 13:55 Apr 06, 2009 Jkt 000000 PO 00000 Frm 00024 Fmt 6633 Sfmt 6621 S:\WPSHR\GPO\DOCS\48450.TXT SCOM1 PsN: JACKIE
21 

17 Response Letter of CenturyTel 3. 18 Id. 3 (emphasis added). 18 Id. 3. 19 Id. 3–4. 20See Center for Democracy and Technology, An Overview of the Federal Wiretap Act, Electronic Communications Privacy Act, and State Two-Party Consent Laws of Relevance to the 

Knobbed System and Other Uses of Internet Traffic Content from ISPs for Behavioral Advertising, (July 8, 2008), available at http://www.cdt.org/privacy/20080708ISPtraffic.pdf [hereinafter CDT Behavioral Advertising Overview]. 

cerning Internet Access Services’’ and provided a web link to the updated policy.17

The policy in question stated only: 

Online Advertising and Third-party Ad Servers. 

CenturyTel partners with a third party to deliver or facilitate delivery of advertisements to our users while they are surfing the Web. This delivery of advertisements may be facilitated by the serving of ad tags outside the publisher’s 

existing HTML code. These advertisements will be based on those users’ anonymous surfing behavior while they are online. This anonymous information will 

not include those users’ names, e-mail addresses, telephone number, or any 

other personally identifiable information. By opting out, you will continue to receive advertisements as normal; except these advertisements will be less relevant and less useful to you. If you would like to opt out, click here or visit 

http://www.nebuad.com/privacy/servicesPrivacy.php.18

A later letter sent out by CenturyTel stated the following: 

CenturyTel continually looks for ways to improve your overall online experience. 

In that regard, we have enhanced our High-Speed Internet service by working 

with partners to provide targeted, online advertising for your convenience and 

benefit. Targeted, online advertising minimizes irrelevant or unwanted ads that 

clutter your web pages. If you do not wish to receive targeted, online advertisements, or if you would simply like more information about CenturyTel’s use of 

online advertising, third-party ad servers and the measures you can take to protect your privacy, please review our Privacy Policy by visiting http:// 

www.centurytel.com/Pages/PrivacyPolicy/#adv.19

No mention is made at all of providing actual user data (let alone all of a user’s 

packets) to third parties. Only a single mention of ads being ‘‘based on those users’ 

anonymous surfing behavior’’ is offered in the first notice, and the second presents 

the service only as enhanced, ‘‘targeted advertising for your convenience and benefit’’ without mention of the methods involved to deliver said advertisements. It’s 

worth noting that these examples are not unique to CenturyTel or even unusual; 

rather, they are indicative of the level of detail provided in many ISP notices. Such 

notices do not make clear to the user what is actually being done with the data they 

send and receive over the Internet. None of the ISPs appears to have required that 

a user take any affirmative action at all before having their data handed wholesale 

to a third party. Inaction or failure to read the notice was simply treated as an ‘optin’. 

It is important to note that nearly every ISP that responded mentioned that they 

run their own websites, and use traditional tracking methods such as cookies to observe and record the behavior of their customers on their sites, much like Google, 

Yahoo, Microsoft, and many other web service providers do. Likewise, many ISPs 

also use what is called a ‘‘DNS redirect,’’ which, rather than returning an error to 

a user’s web browser when he or she types in an incorrect web address, redirects 

the user to another web page which may have related suggestions, advertisements, 

or other information. 

These non-DPI practices have privacy implications that overlap with the ones 

being discussed today, but which are different in kind and scope. It is the difference 

between you writing down what I tell you on the phone and my phone company recording my conversation with you because unlike my phone company, you cannot 

record what I’ve said on my phone calls to other people. Nonetheless, the privacy 

practices of and personal information available to application providers raise their 

own serious questions of legal policy, and any regulatory regime we consider must 

be comprehensive and attempt to ensure the protection of Internet users against 

privacy invasions from all such sources. 

V. Current Law 

Independent analysis by the Center for Democracy and Technology suggests that 

although it is far from clear, despite ISP claims,20 past experiments with DPI and 

behavioral advertising of the type engaged in by Knobbed may run afoul of existing 

law. Critically, however, some of the laws in question might not apply if the ISP 

22 

21See id. at 6–9. 22 Response Letter of CenturyTel 2–3 (Aug. 7, 2008). Cable One does describe their disclosures 

in their Acceptable Use Policies as ‘‘opt-in’’ because the user must check and acceptance box, 

but this does not qualify as either an affirmative step specific to monitoring or a meaningful 

opportunity to deny consent, because the alternative is no Internet service at all. See Response 

Letter of Cable One 3 (Aug. 8, 2008). 23 Response Letter of Charter Communications 2 (Aug. 8, 2008) (emphasis added). 24 Ryan Singel, Congressmen Ask Charter to Freeze Web Profiling Plan, Threat Level from 

Wired.com (May 16, 2008). See also Ryan Singel, Can Charter Broadband Customers Really OptOut of Spying? Maybe Not, Wired (May 16, 2008). 25 47 U.S.C. § 222. 26See 47 U.S.C. § 222(c)(1). 27See 47 U.S.C. § 222(d). 28See 47 U.S.C. § 222(c)(3), (h)(2). 

engaged in this behavior internally, instead of delegating responsibility to a third 

party.21 Thus, an ISP might legally be able to read and analyze all of its customers’ 

communications as long as it does so itself—hardly an improvement in privacy. 

It is extremely important to note that without apparent exception, every ISP that 

responded to Chairman Markey’s letter concluded that both the tracking and optout mechanism were legal, or at the very least, were ‘‘not unlawful or impermissible.’’ 22 One ISP even went so far as to claim that it ‘‘offered customers easy-touse opt-out mechanisms as recommended by the FTC.’’ 23 However, even the ‘‘optout’’ method was questionable, as the act of opting out did not stop the delivery to 

and monitoring by the third-party partner but only the presentation of targeted ads 

and stored profiles.24

Yet to date, no enforcement actions have been taken against a practice that is of 

significant concern to citizens and lawmakers alike. Regardless of whether or not 

the actions taken by ISPs are technically legal, the existing legal regime is clearly 

not effective at preventing such privacy violations. And if ISPs believe they can legally and profitably engage in this behavior with only a minimal effort made to notify and protect users, they will continue to do so. 

To the credit of the ISPs here today, several providers have made commitments 

to ensuring that there is transparency, affirmative consent, and ongoing control by 

customers. For example, Time-Warner’s testimony suggests control, transparency, 

disclosure, and safeguarding personal information as principles on which to base a 

privacy framework. AT&T states that the company will not engage in behavioral advertising without affirmative, advance action by the consumer that is based on a 

clear explanation of how that information will be used. But while these are laudable 

principles and we applaud the carriers here today for their stated commitment to 

customer privacy, promises by individual ISPs are not enough and do not obviate 

the need for a comprehensive governmental policy. 

Part of the reason for the current lack of enforcement can be traced to ambiguity 

in the FCC’s authority to protect the privacy of Internet users, despite the FCC’s 

time-honored role in protecting the privacy of communications as a whole. Congress 

has long recognized that providers of communications services occupy an especially 

sensitive position in society. As data conduits, communications services are uniquely 

positioned to track customers and collect information about their daily lives. The 

Communications Act, which created the FCC, contains provisions designed to protect the privacy of telephone and cable customers. But those same protections have 

yet to be unambiguously extended to Internet customers. As a result, customers cannot be confident that their sensitive information is protected from unwanted intrusion. In a society where Internet services are increasingly used to transmit personal 

and sensitive information, this is clearly problematic. 

Section 222 of the Communications Act applies to the privacy of customer information collected by common carriers.25 The statute recognizes that ‘‘individually 

identifiable consumer proprietary network information’’ is created by, and critical to 

the functioning of, telecommunications services.26 However, the statute strictly limits the use of that information to applications that handle tasks like billing and the 

maintenance of network integrity.27 Carriers are allowed to provide aggregate consumer information to third parties, but this information must have both ‘‘individual 

customer identities and characteristics’’ removed.28 Viewed holistically, this section 

manifests a Congressional understanding that common carriers have access to sensitive personal information, and that common carriers have legitimate reasons to 

use that data. However, this understanding is balanced by strict prohibitions 

against any non-essential use or the disclosure of sensitive data. 

23 

29See, e.g., Verizon, http://www.verizon.com/. 30See National Cable & Telecommunications Assn. v. Brand X Internet Services, 545 U.S. 967 

(2005). 31See 47 U.S.C. § 551(b). 32See 47 U.S.C. § 551(c)(1). 33See 47 U.S.C. § 551(a)(2)(A). 34See 47 U.S.C. § 551(c)(2). 35See 47 U.S.C. § 551(a)(2)(C)(ii). 36Statement of Congressman Edward Markey, 142 Cong. Rec. H1145–06 (Feb. 1, 1996). 37The FCC has already presented us with an example of how Commission action and ISP disclosures can be used to help protect Internet users from privacy invasions and impermissible 

network management practices. In its order finding that Comcast’s interference with customer 

traffic was not reasonable network management, the Commission ordered Comcast to fully disclose the details of its past and planned practices, including use of DPI. See Federal CommuContinued 

Although many common carriers provide Internet services to consumers,29 such 

Internet services are not covered under Section 222.30 As a result, plain old telephone customers can be confident that sensitive information contained in their 

phone records will be kept confidential, but they cannot enjoy the same level of confidence when it comes to sensitive information that Verizon might compile using 

their DSL Internet activity. 

Section 631 of the Communications Act also marks an attempt by Congress to protect the privacy of consumers, this time from cable system operators. Again, the 

statute recognizes the fact that operators will need to collect and use some personally identifiable information in order to operate their systems. However, these operators are required to obtain written permission from consumers in order to collect 

any personally identifiable information that is not crucial to the operation of the 

system.31 Additionally, operators are required to obtain prior written or electronic 

consent before disclosing any personally identifiable information.32 The statute does 

not impose these same protections on aggregate data that does not identify a particular customer,33 and allows an operator to disclose names and addresses of subscribers as long as that information is not tied to use or transactional information.34

As with Section 222, Section 631 specifically protects sensitive information that 

network operators are uniquely positioned to collect. However, unlike Section 222, 

which applies to phone customers but not Internet service customers, Section 631 

is written to apply to both cable television subscribers and cable Internet subscribers.35

Unfortunately, not all customers access the Internet by way of a cable system. In 

addition to unprotected DSL service, customers can access the Internet via a fiber 

optic network, a satellite based service, or by using one of many wireless Internet 

standards. Instead of relying on old categories that may protect some (but certainly 

not all) consumers, Congress must recognize that all Internet service providers 

share the same privileged position of access to their users’ personal data. As a result, Congress should collectively protect customers with legislation that specifically 

addresses all Internet service providers, rather than legislation that effectively 

forces customers to access the Internet via a single, protected pathway. 

The time has come for a comprehensive regulatory structure that will ensure that 

the privacy rights of all Internet users are protected, and one that, like the Telecommunications Act of 1996, ‘‘expands very important privacy protections to individuals in their relationships with these very large companies.’’ 36

VI. Fixing the Law 

Given the power of the technology and the scope of possible uses, it is critical that 

we establish industry guidelines and legal protections for users. And while the use 

of personal data by application providers is not the focus of our discussion today, 

as discussed above, any solution should strive to be comprehensive in scope and ensure that the basic principles of privacy protection are applied across the entire 

Internet ecosystem. These protections should meet three major goals that parallel 

the privacy inquiries described above: 

• They must ensure that the purpose of the use of customer data is one which 

can be consistent with consumers’ privacy expectations. 

• They must ensure that the amount and type of data collected is narrowly tailored to the proposed use, and that the data is not kept or disseminated to third 

parties past what is necessary to that use. 

• They must ensure that customers have access to and actually receive adequate 

information about the proposed use, and have affirmatively and actively consented to any practices which could violate customers’ expectations of privacy.37

24 

nications Commission, Memorandum Opinion and Order ¶ 54–56 (August 1, 2008), available at 

http://hraunfoss.fcc.gov/edocslpublic/attachmatch/FCC–08–183A1.pdf. Given the authority, 

the Commission could make this type of disclosure an industry-wide baseline to ensure that customer’s decisions about granting consent are based on good, complete information backed the 

force of law. 38Federal Communications Commission, Common Carrier News Release (Feb. 19, 1998), available at http://www.fcc.gov/Bureaus/CommonlCarrier/NewslReleases/1998/nrcc8019.html 

(clarifying permissible uses of Customer Proprietary Network Information). 

In order to achieve these goals, the Committee should seek to pass legislation to 

encapsulate these requirements and to make it clear that the FCC has the power 

to enforce them. As the Commission observed in 1998, ‘‘The [Communications Act] 

recognizes that customers must be able to control information they view as sensitive 

and personal from use, disclosure, and access by carriers.’’ 38 The Committee and 

Congress need only make it clear that Internet user privacy is another area of communications where the Commission is empowered to protect consumer privacy. 

VII. Conclusion 

I would like to thank the Committee again for giving me the opportunity to testify 

today. Public Knowledge is eager to work with the Committee to craft comprehensive privacy legislation that will protect Internet users. I look forward to your questions. 

Senator DORGAN. Ms. Sohn, thank you for your testimony. 

Why do we not start with where you concluded on deep packet 

inspection? I know that our colleagues in the House had sent questionnaires to Internet service providers and have received some responses. How extensive do you think is this tactic of deep packet 

inspection? 

Ms. SOHN. Well, it was more extensive than it is now. Because 

of the scrutiny over on the House side and also over here, several 

of the ISPs that were using deep packet inspection have ceased 

using deep packet inspection. There was such an outcry. However, 

some are still using deep packet inspection. 

And as I said before, a number of those—actually all of the providers that were using deep packet inspection who responded to the 

House said that they believed that they were fully acting within 

the law and that what they did to protect consumers was adequate. 

And speaking to some of the folks—I will let them speak for themselves—on my right, I know some of them are considering using 

DPI as well, albeit with the protections that they have outlined 

today. 

Senator DORGAN. Is there a beneficial use of deep packet inspection, for example, attempting to determine who is out there that is 

providing viruses? So is deep packet inspection a process that in 

some cases can be beneficial? 

Ms. SOHN. Absolutely. Public Knowledge has been saying in the 

7 years of its existence, that you do not outlaw technology. You outlaw bad uses of technology, and DPI, as you stated, can be used 

for lawful and very beneficial purposes. 

Senator DORGAN. But the testimony and knowledge we have, for 

example, of NebuAd and others says that the purpose of deep packet inspection is to track people’s behavior in a wide range of areas 

and then profile and do targeted advertising to that profile, which 

is done, I assume, largely without the knowledge of the user, which 

is very troublesome. 

Ms. Attwood, you indicated to me that the fact that the Senate 

and the House are beginning to evaluate these things was helpful 

to your company because these are relatively new issues and it 

25 

really caused your company to be thinking what kind of policies do 

we employ, how do we go through this and develop policies internally. And I think that is commendable. 

The question I think for the three providers here is what kind 

of information do you collect at this point. What kind of movements 

do you track and for what purpose? 

Ms. ATTWOOD. Well, it is a great question. I guess I would elaborate. Here we are talking about behavioral advertising. 

Senator DORGAN. Right. 

Ms. ATTWOOD. And in that context, we are not engaged in that 

practice today. And we commend you and this Committee and the 

attention and the effort to look at the way in which collection of 

material has affected or prompted our consumers to identify what 

they are concerned about. 

That allows us to actually look as we enter into these phases to 

say can we use privacy as a design element. Rather than as a regulatory requirement or as something after the fact that we have to 

look at, let us look and say our products and services—privacy will 

be by design. And that is what this dialogue allows us to do. It allows us to as an industry galvanize around how we can construct 

the right framework so that we can bring the benefits of both the 

advantages of an advertising-supported model, which is really an 

innovation in the Internet area, as well as the capabilities of protecting the privacy of our customers. 

So we have millions of customers, and therefore we have lots of 

information that we use to improve the services and products of 

our customers. There is a lot of value that can be created and innovation that can be created in offering additional targeted advertising, as well as additional value propositions to the customer. We 

think that is something today that has proved itself, whether it is 

affinity cards or whether it is in some things that you already see. 

Those are areas where we are hopeful we can help innovate, as 

long as we consider privacy by design. 

Senator DORGAN. As a consumer and an Internet user, I see the 

value of targeted advertising because if I am on the Internet wanting perhaps buy a pair of shoes and then I see targeted advertising 

coming at me advertising certain kinds of shoes, perhaps even that 

same brand, I understand that someone saw I was looking at 

shoes, and so they were trying to provide additional advertising 

about shoes. In many ways that is useful, perhaps in some cases 

annoying, but in many other cases useful. 

But the other side of this is that an Internet service provider 

would have a substantial body of knowledge. Let us assume that 

my two colleagues, Senator Klobuchar and Senator Thune, are customers of the same provider. You would have a substantial amount 

of information about each of them, what they have done, what their 

travels have been on the Internet, where they have visited, and so 

on. And that could have enormous financial value to a company. 

And someone comes to your company and says, you know what? 

That information you are sitting on has great, great value. We will 

pay a lot of money for it. So that is where the advertising model 

on the Internet confronts the issue of privacy that is very, very important. 

26 

So I appreciate the testimony today. I think all three of you have 

said that your companies have had to sink their teeth into this 

question of how do you deal with the privacy issue. You have all 

talked, I think, about the opt-in strategy doing so in a manner that 

has a customer that is fully informed. 

I have seen a number of opt-in strategies that I think, Mr. 

Tauke, you mentioned. People do not have the foggiest idea whether they have opted in or opted out. They have simply pushed the 

‘‘OK’’ button with the cursor, and so there they are. 

This is a really interesting set of issues. I did indicate that if 

somebody followed you into a mall with a clipboard and traced everything you not just bought or store you visited, but every single 

item you looked at, you have great angst about that. Who on earth 

is doing this? And yet, that potential exists. And so that is why we 

have to try to deal with this tension between constructive advertising models on the Internet and the right to privacy. 

Senator Klobuchar is next. 

STATEMENT OF HON. AMY KLOBUCHAR, 

U.S. SENATOR FROM MINNESOTA 

Senator KLOBUCHAR. Thank you very much, Chairman Dorgan. 

Thank you for having this hearing. Thank you to our witnesses. 

At the last hearing on this, I expressed my views that Americans 

have a love-hate relationship with advertising on the Internet. We 

want to see some of it, and then some of it we do not want. 

I made the mistake, Mr. Chair, of using the example at the last 

hearing of how I liked to see ads pop up for deals on clothes, but 

I do not like it when my daughter who is 13 sees ads for American 

Girls. And as a result, I would just like the record to reflect, I got 

several letters from defenders of American Girl dolls. It was in the 

Los Angeles Times—my quote. And I just want the record to reflect 

that I have nothing against the American Girl dolls, including 

Kirsten, Molly, Kaya, and Kit Kittredge, which movie I just saw. 

So if you could just make that clear. 

Senator DORGAN. Well, the permanent record will reflect—— 

[Laughter.] 

Senator KLOBUCHAR. Thank you very much. 

I actually just had some questions looking at your testimony and 

thinking about what we talked about last time. You know how 

when you have your credit record, you are able to go back and clear 

it up and see what information is on there. Do you think you 

should have the same ability to do that as a consumer with any 

information that might be on there on your shopping record or the 

information on you on the Internet? I do not know who wants to 

take that. 

Ms. ATTWOOD. I am happy to address that. I think that is one 

of the issues that would be interesting to develop, the question of 

whether the customer not only can control the information that is 

collected, but also can identify and see what they look like online. 

And even more to your point—and I do not want letters either, although I do not think I would get them from American Girl. 

Senator KLOBUCHAR. These were just consumers for American 

Girl, not the company. 

27 

Ms. ATTWOOD. Maybe ultimately down the line you would be able 

to have some flexibility in identifying what advertisements you 

want to see and what you do not want to see. So those could be 

age-specific. Those could be related to your household, a particular 

interest in your household. 

So the concept of customer control, the concept of using the capabilities and enhancements of the technology to help customize that 

experience is something of an exciting prospect so long as we protect and really embrace the notion of privacy. 

Senator KLOBUCHAR. Mr. Stern? 

Mr. STERN. Thank you, Senator. 

If I may just add, not only does customer consent allow the consumer to opt in, if they want to have online advertising be targeted, but they can also opt out. And that gives them a unique ability to do something that they cannot do with their credit report, 

which is to wipe the slate clean. And so we think that that is actually an important part of this, giving customers the ability to make 

a decision and later change their mind. 

Senator KLOBUCHAR. Very good. And the technology is available 

to do that? 

Mr. STERN. Yes, it is. 

Senator KLOBUCHAR. If we were to put together some legislation 

at some point—and I know all three of you would rather have it 

be self-regulating, but if Federal privacy regulation is considered in 

Congress, what would you think the key would be to this potential 

legislation? What do you think should be in that? Are there any 

models you would look at like the European data privacy law, or 

what would you look at to do that? Mr. Tauke? 

Mr. TAUKE. Well, Senator, first of all, you are right. At this juncture, we are not prepared to embrace legislation. We actually think 

that there are some models on the books already that could be useful. I mentioned in my testimony the advertising industry’s model 

where the FTC is the enforcing agency. 

One of the reasons why we are a little unsure about legislation 

at this juncture is because this technology is developing so rapidly, 

and there are different technologies that are being used to do different things. As I think all of us have alluded to in one way or 

another, the technology is not in and of itself bad. The technology 

can do terrific things in order to enhance online experiences. It is 

how it is handled and what the consumer role is. 

So having said that, with legislation I believe the notion of meaningful consent and the consumer in charge of their online experience are the two key elements. Exactly how that translates into the 

technology of today and the technology and practices of tomorrow 

is a little uncertain yet. That is why I think if the industry could, 

in a sense, help establish some best practices ourselves, try to keep 

up to date with that stuff, get all the players involved, because the 

consumer does not care who is tracking—you know, it is the same 

impact no matter who is doing it—if we could do that and then 

that might inform the Committee too of what we are doing and 

where gaps may be and if you should step forward with some additional legislation. 

28 

Senator KLOBUCHAR. Do you think competition could push, 

though, some of your fellow competitors not to keep up with those 

regulations? 

Mr. TAUKE. Competition works both ways on this issue, Senator. 

I mean, I think what we have found in our history on some of these 

issues is being on the side of the consumer and privacy is not a bad 

deal. We have had some fairly highly publicized lawsuits over the 

last few years trying to protect our consumers’ privacy, and we 

think that benefited us in the marketplace. 

When we have dealt with issues like—I remember a couple decades ago now, I guess, when we were dealing with caller ID. In 

other words, there were a lot of fits and starts with caller ID. Initially it was thought to be a great privacy protector because you 

could see who is calling you. Then, of course, there was concern 

that, oh, now the estranged husband knows something about who 

is calling the wife and various other things that happened. And so 

there was concern from a domestic violence perspective and so on. 

Then we had blocking that came into play and various other things 

happened with the technology. 

So we evolved to the place today I think where most consumers 

really like the technology, the information it provides. They know 

how to protect themselves if they do not want their number following their call. 

So I think it is the same thing here. We have to, over time, figure 

out how to do this the right way. 

But I think it is in our company’s interest to be on the side of 

privacy. I think that is a marketing advantage. I think that for the 

industry as a whole, it is essential that we get there. The worst 

thing for our industry is the consumers are afraid to use the Internet. 

Senator KLOBUCHAR. And I would agree with you, especially from 

larger, mainstream companies that do not want to be tarred with 

having not protected privacy rights. But not all the companies in 

the game might care about that as much. And that is why I am 

looking at some rules that could maybe protect your own industry 

if you had some rules that you already believe are in your best interest that could protect the consumers from other companies 

which might not share your interests in protecting privacy as a 

marketing and as a good thing to do as a company. 

Ms. ATTWOOD. Yes. I would like to underscore that because not 

all folks in this space have consumers that they answer to. We 

fully agree with Verizon’s position about this being a marketing advantage. AT&T views that absolutely as a great opportunity here. 

But right now there is behavioral targeting in the online environment, and it is by web actors who do not have direct customers to 

answer to. 

The beauty of an advertising-supported model is that it is free. 

The disadvantage is that your customer is your advertising industry. It is not retail. It is not our customers. So while I think that 

there is a direct advantage that we have to our customers, I think 

we would, at AT&T, say another key element to any legislative proposal would be that it apply to all actors because that is really the 

only way. I mean, we talk a lot about from a competitive point of 

view, and clearly that is of interest to AT&T. 

29 

But I would say from a customer confusion question, without 

really addressing this issue holistically, when the customer turns 

on the computer and goes to a web page and on that web page 

there is advertising and on that advertising, that customer has indicated to AT&T that they do not want to be tracked, I cannot do 

anything to protect that customer from being tracked by other entities that are, in fact, appearing in that advertising space. 

So until we address this holistically, even efforts from companies 

such as ours suggesting that there ought to be control and ought 

to be affirmative selection by the customer cannot be implemented 

fully, and the customer can be confused. 

Senator KLOBUCHAR. Thank you. 

Senator DORGAN. We had other companies testifying at the first 

hearing, and at that point we did not have the Internet service providers, which is why we wanted to have Internet service providers 

at this hearing. I understand the point you are making. 

Senator Thune? 

STATEMENT OF HON. JOHN THUNE, 

U.S. SENATOR FROM SOUTH DAKOTA 

Senator THUNE. Thank you, Mr. Chairman. 

And that was an interesting hearing, and this is an issue that 

is getting a lot of attention, as you would expect. And I do not 

think there is any question that online advertising is the fuel for 

this economic engine that is really driving the world right now. It 

has resulted in substantial access to free content for people on the 

worldwide Web. 

But I do want to pick up on the previous discussion here because 

I think, Mr. Tauke, you had mentioned in your remarks that the 

industry is working to develop self-regulating privacy standards for 

online advertising. And to get back to Ms. Attwood’s point, one entity cannot do this. There has got to be some sort of an agreement, 

I think, within the industry. 

So I guess my question is, what is the time line for those standards? Who is participating in developing those standards? What are 

those standards going to look like? And will you keep us updated 

as you progress down that road? 

Mr. TAUKE. First, we have signed some nondisclosure agreements with some other companies that would not permit me to 

today publicly disclose who all the players are. But I think it is fair 

to say that there are ISPs, there are representatives of other online 

types of activities. So I think we are seeing people from all parts 

of the online sector, the search engines, the browsers, and so on, 

who are interested in participating in this kind of thing. 

We also have talked to and engaged with some in the advertising 

industry who also have an interest. 

I cannot tell you we will get there, but I am encouraged by the 

progress so far. And I think it is feasible that in over a matter of 

a few months we would be able to get a pretty strong group of players in the industry to move forward with best practices. 

Then the question becomes how do you enforce those. First, there 

is a lot to be said for shining the light of day on a lot of practices, 

and if industry is focused on doing that, it is able to do that, and 

force change. That happened with this Committee. This Committee 

30 

held a hearing, and as the witnesses have pointed out, people 

stopped their behavior because the light of day was shined upon it. 

That is what an industry group can do. 

Second, as we have alluded to earlier, the Federal Trade Commission also has jurisdiction in this area, has indicated it intends 

to assert jurisdiction, and if informed by good industry practices 

and standards, then I think the FTC would have greater ability to 

act appropriately. 

Senator THUNE. Do you have a time line for when all this 

might—— 

Mr. TAUKE. What I would like to say to you is it will all happen 

in 2 months. I do not know that I can say that. I think this is a 

process. You are familiar with that, of course, in the Senate. It is 

a process. I think we have made good progress. I think as you have 

heard this morning, several companies are endorsing very similar 

principles here. So I think that there is a consensus developing. 

And I hope by the end of the year, certainly by the time you come 

back, that we can report back to you and give you progress on 

where we are. I think we will have something fairly good to say. 

Senator THUNE. That would be really helpful because I think 

that that is a preferable solution to having us try and legislate 

something in this area. But it has to be at least, I think, somewhat 

comprehensive in terms of the scope of those from industry who are 

participating in order to make it effective. So I would encourage 

you as you continue down that track. 

And I would direct this, I guess, to any of our panelists. But you 

talk about sensitive information deserving a greater degree of protection than regular online uses. And I guess the question would 

be, what is considered sensitive personal information? Is that a 

health record? Is that a credit card history, e-mails? What qualifies 

in your judgment in that category of sensitive information? 

Mr. STERN. Senator, all of those could count as sensitive information. Certainly medical information is sensitive. And we believe 

that this opt-in framework ensures that we will protect those forms 

of sensitive information. 

We also think that there are certain types of information—and 

medical information may be one of those—that merits a dialogue 

between policymakers and participants in industry that would put 

even more stringent controls around certain types of information, 

including making it possibly entirely off limits for activities like 

targeted online advertising. 

Ms. SOHN. I think it is critical that it is the Internet user who 

makes that choice as to what is sensitive. Right now with deep 

packet inspection, sometimes it is a third party or the NebuAd that 

is deciding what is sensitive and not. As you point out, there is not 

a commonly understood definition of what sensitive is. So that is, 

to me, a critical part of putting control back in the Internet users’ 

hands. They decide what is sensitive as opposed to a third party 

with whom they are not even contracting. 

Mr. TAUKE. Let me just say first this is a tough area. It is hard 

to define exactly what the sensitive information is and precisely 

how you handle it. 

So, for example, we all agree, I think, that medical records would 

be sensitive information. Yet, I get my prescriptions online. I do not 

31 

know about the rest of you. And I want my online pharmacist to 

keep track of what I have. I am happy when they send me a notice 

saying, you know, it is time to renew your prescription. If I would 

get another prescription that interacted inappropriately with what 

I have today, I would hope that they would notify me and tell me 

that. So that means we are asking them, on the one hand, to keep 

track of some of these things. On the other hand, this is certainly 

information that most of us would say should not be tracked. 

So there are some fine lines here to draw. It is tough, but I think 

that this is part of what we hope we can make progress on in an 

industry process. 

Ms. ATTWOOD. I would also underscore what Gigi said, which is 

absolutely creating tools to enable our users to be able to individually assess what is sensitive will be a critical thing, again, another potentially wonderful advance that we could use the technology to actually empower the customer to orient themselves 

around what is sensitive. 

The last thing that the provider wants to do is make that judgment. I can tell you whether Government makes it or the user 

makes it, the last thing that we want to do is try to make some 

judgment as to what is important to our customers when it comes 

to sensitive information. 

Senator THUNE. Mr. Chairman, I have one more question. My 

time is expired. 

Senator DORGAN. Why don’t you proceed? 

Senator THUNE. OK. I would like to have you describe—Mr. 

Stern, you mentioned the difference between relevant online advertising and targeted online advertising. Could you elaborate on the 

difference between those two, and from your perspective, are those 

different types of targeted online advertising that are more problematic for consumer privacy? 

Mr. STERN. Ads can be relevant for a number of reasons, Senator. For example, when customers come to a Website and they go 

to the sports page of that Website and then they see advertisements for team memorabilia, that context was used in order to 

make the ad relevant. However, if the relevance is based on the 

customer’s behavior on other unrelated Websites, then we would 

consider that targeted online advertising, the type of advertising 

that should be governed under the four principles that we talked 

about earlier, informed consent, plus safeguarding consumer privacy, and value. 

Senator THUNE. Thanks, Mr. Chairman. Thank you all very 

much for your testimony. 

Senator DORGAN. Senator Wicker? 

STATEMENT OF HON. ROGER F. WICKER, 

U.S. SENATOR FROM MISSISSIPPI 

Senator WICKER. Thank you, Chairman Dorgan, for having this 

follow up hearing. 

You know, I was sitting here thinking John Thune came to the 

House of Representatives in 1996. I got here in 1994. We were talking about this thing called the worldwide Web. If we had a little 

time during the orientation, we could go to a room and surf the 

32 

worldwide Web. And to think how far this industry has come in 12 

or 14 short years is just breathtaking. 

I pay my bills. I check my balance. I make purchases. And it is 

the engine that is largely driving the international economy, and 

we want to be able to facilitate that for the economy and for job 

creation and for consumers’ convenience. 

So I appreciate the fact that there seems to be a feeling that the 

Congress should defer perhaps and see if these issues of privacy 

and behavioral advertising can be worked out among the participants rather than as a result of legislation. 

I will begin with Mr. Tauke. Maybe within 2 months, we might 

have an agreement announced among the providers. How will they 

compare to the proposed behavioral advertising guidelines of the 

FTC? 

Mr. TAUKE. I think all of the companies that are engaged in discussion on this issue are well aware of the FTC’s principles. And 

of course, you never know the outcome of a discussion until it is 

completed. But I think what the FTC laid out has been very helpful 

and informative, and in turn, we would hope what the industry 

could come up with would also be helpful and informative to the 

FTC. 

Senator WICKER. OK. Other panelists? 

Mr. STERN. Senator, we think the principles that we have proposed are very similar to what was laid out by the FTC, but they 

actually go one step further in protecting consumer privacy. And 

that is that we are seeking affirmative customer consent for the 

use of any type of information for the purposes of targeted online 

advertising, not just personally identifiable information. 

Senator WICKER. And would you explain what you mean by that 

to a layman? 

Mr. STERN. Absolutely. When you held your testimony in July 

and met with NebuAd, they talked about the ability that they had 

with their technology to anonymize the data that they received so 

that they would track the customer’s behavior, but it could not be 

attributed to any individual. It would be used to deliver relevant 

ads to that individual while they browsed, but they could not tie 

it back to a person. They could not tell that that browsing behavior 

was your browsing behavior, although they could change your 

browsing experience based on the information. 

What we are proposing is that we would not even do what 

NebuAd talked about, absent affirmative customer consent. In 

other words, we would not use your information whether or not we 

could attribute it to you personally to deliver targeted online advertising to you. 

Senator WICKER. I see. 

Other members of the panel? 

Ms. ATTWOOD. Well, I would just say I think that the FTC process has greatly informed our industry discussions. They were able 

to, along with great work that has been done in the privacy consumer community by Ms. Sohn’s group, by CDT, others that have 

helped shed light on the issue, helped identify the practices that 

are most concerning to consumers, and have through the imprimatur of the FTC and its process created importance, as has this 

Committee, creating the incentive for the industry to come together 

33 

to talk, to make sure that we understand how we can, in fact, 

achieve ultimately a greater sense of privacy assurance for consumers so that they use our services and use the Internet even 

more. I think that there is no question that the FTC process has 

been quite involved in the development of that. 

Ms. SOHN. Can I be the skunk at the self-regulatory party? Because—— 

Senator WICKER. That would be a lot of fun. 

Ms. SOHN. I want to make two points. 

Number one is to address something that Senator Klobuchar said 

about competition. The problem is that, at least in broadband, 

there is not that much competition. This is something my organization has talked about for a long, long time. And a lot of the ISPs 

that were using deep packet inspection and NebuAd were not subject to great competition. A lot of them were rural ISPs. So the notion that there is going to be this competitive pressure, I’m dubious. 

The second thing—and this is the point that I discussed in my 

oral testimony but discuss in more detail in my written testimony—is that the Communications Act already does cover some 

ISPs. There is a lot of talk about a level playing field, but right 

now cable Internet services are covered by stricter privacy regulation than broadband telephone information ISP services. So there 

is already in the law gaps where Mr. Tauke’s company is being 

treated differently than a Comcast. So I do think that at a minimum you need to amend the Communications Act to fix those gaps 

because right now you do not have a level playing field between 

broadband ISPs. 

Senator WICKER. Response? 

Mr. TAUKE. Part of that highlights the point. Yes, there are all 

kinds of rules that apply to all different companies differently. If 

you guys could take on the Communications Act and level the playing field, most of us would applaud heartily. But rewriting that 

act—it has been a long process and it is very hard to get anything 

to fruition when you take on that major a task. 

So we are not saying that we are opposed to the Committee addressing the issue, but what you are doing here, having a hearing, 

forcing industry to address the issue is helpful. We have the FTC 

that has some authority already. We have an industry that I think 

wants to get its act together. It is in our own interest to clean up 

the act. Right? So I think that can help. 

If all that should happen, if the Senate—God bless you if you go 

forward and do your thing. That is terrific. But in the meanwhile, 

I think there is a need for this other activity to go on. That will 

inform what you do. It may turn out this is not such a big issue, 

or it may turn out there are other problems that arise as this goes 

on. But we ought to go forward with the self-regulatory approach, 

try to use what is there, and that will help inform you, I think, 

what the challenges are and where we may need additional legislation. 

Senator WICKER. Thank you. 

Senator DORGAN. Senator Wicker, thank you. 

This issue of self-regulation—I think the process that is ongoing 

is very valuable. But in the ultimate, self-regulation works if there 

34 

is, number one, adequate criteria established, and number two, if 

it is enforceable. And one of my concerns is that what is happening 

now and what will happen in the future with respect to Internet 

advertising is various entities, content providers, Internet service 

providers, and others, have information that is going to become increasingly valuable, and it is tempting product to sell to someone 

who would like to purchase it. And so the question is under what 

conditions does that happen. 

I want to come back to this question. Mr. Stern, you talked about 

when NebuAd appeared before this Committee and the 

anonymizing of information. It seems to me, however, that if 

NebuAd gathers all of this information and develops the strategies 

for targeted advertising and profiling, that if they are able to deliver that advertisement back to the Internet address, it is really 

not anonymous, is it? 

Mr. STERN. Senator, there is a separation between the information that NebuAd has, which is a profile attached to an anonymous 

identifier, and the information that the ISP has, which is the connection between that anonymous identifier and the individual. As 

a consequence, there is—and I am not an expert on NebuAd’s technology, given that we have not engaged in targeted online advertising and we have not done any sort of a deal with NebuAd or 

anyone like that—but there is, in fact, a set of technologies that are 

used in that approach to protect the customer’s identity and anonymity. 

Senator DORGAN. But there has to be a string somewhere from 

the information gathered and then ultimately delivered to the 

Internet address of the person whose tendencies on the Internet 

have been profiled. I mean, this reminds me of the discussion I sat 

in last night for 2 hours on the financial rescue issue, the discussion about firewalls that exist. It turns out the firewalls were not 

so fireproof. 

Mr. STERN. That is correct, Senator. There is no perfect technology here. 

But the principles that we have outlined ensure that targeted online advertising would only take place if consumers affirmatively 

consent after being informed of how their information will be used. 

As a consequence, we think that the harm that you have raised is 

one that customers will be able to evaluate and weigh against the 

benefits that they will enjoy by being able to see more relevant ads. 

Senator DORGAN. It is interesting. I was just looking at a report 

that was released this morning. The information was provided me 

last evening of what was to be released this morning. It is a poll 

released today by Consumer Reports’ National Research Center, 

and it has a lot of interesting information in it. There is a lot of 

misinformation out there and a great deal of lack of information. 

Consumers are aware that information about their surfing habits, that is, movements on the Web, is being collected online. And 

here is what they believe. 

Sixty-one percent of consumers are confident that what they do 

online is private and not shared without their permission. That is 

what people now believe. 

35 

Fifty-seven percent believe that companies must identify themselves and indicate why they are collecting data and whether they 

intend to share it with other organizations. 

Forty-eight percent believe that their consent is now required for 

companies to use personal information they collect from online activities. 

Forty-three percent believe a court order is now required to monitor activities online. 

I only describe that to you because this is just released this 

morning. What it does show is while people, I think almost all of 

us would understand, are very concerned about privacy, they have 

very little understanding about what exists or what might not exist 

to create fences or gates or protections for their online privacy. 

I think that the work that our colleagues in the House have done 

with their data gathering and hearings, the work that we have 

done, and the work that the FTC is now doing and the efforts by 

people in your industry to come together and develop approaches— 

again, I think in many ways these hearings kind of provoke and 

require people to be thinking what are we doing and how does it 

relate to what our responsibilities are and what the law is. I think 

all of this is constructive for us, as we move down the road here, 

to understand what is necessary. Is this something that can be selfregulated with enforcement capabilities, or will there need to be, 

both at the FTC and also will there need to be here in the Congress, some legislative guidelines developed that will inform us as 

we move forward. 

I do not think any of us fully know the answer to that, but we 

are now learning a great deal more than we knew, which I think 

is progress. 

I want to thank the three Internet service providers for making 

themselves available for this hearing. Your testimony, I think, is 

instructive for us. 

Ms. Sohn, the title of your organization is Public Knowledge, 

which is pretty all-encompassing I was thinking, as I read that last 

evening. So we thank you for providing public knowledge about 

these issues from your perspective, which I think is also very valuable to this Committee. 

This hearing is adjourned. 

[Whereupon, at 11:10 a.m., the hearing was adjourned.] 

(37) 

A P P E N D I X 

PREPARED STATEMENT OF HON. DANIEL K. INOUYE, U.S. SENATOR FROM HAWAII

For the American people, privacy is a treasured right, but it is also a right under 

regular attack. In this digital age, commercial forces can amass treasure troves of 

data about each and every one of us. This is especially true when it comes to where 

we go and what we do on the Internet. 

Today we focus on the on-ramps to the Internet, and explore in greater depth the 

consumer privacy policies of our Nation’s largest broadband providers. We will consider the abilities these providers have to view our online behavior and discuss what 

notice they should provide to consumers when they seek to do so. Further, we must 

examine whether our communications laws governing consumer privacy have kept 

up with rapidly changing technology or require adjustment. 

I look forward to hearing from our witnesses. 

Æ