The FTC Tuesday released its agenda for its upcoming privacy roundtable scheduled for Dec. 7. The December roundtable is the first of three such events aimed at examining the privacy challenges posed by technology and business practices that collect and use consumer data. The Washington event will include discussion of online brokers, online behavioral advertising, consumer expectations and disclosures, and the "benefits and risks of collecting, using and retaining consumer data." Nearly three dozen companies, groups and individuals have filed comments on the upcoming workshop.
Don't kill off over-the-air television just yet. That's the central message in a terse letter that Rep. John Dingell, D-Mich., fired off to FCC Chairman Julius Genachowski Monday urging him not to go rummaging for wireless spectrum among the frequencies allocated to TV broadcasters for their digital signals. Citing a major spectrum scarcity, the FCC needs to identify more wireless airwaves to accomplish the sweeping goals to be outlined in its upcoming national broadband plan -- and is salivating over the juicy frequencies broadcasters received. "I believe that a further loss of spectrum by broadcasters may have an adverse effect upon consumers by limiting their choice in available broadcast television," warned the lawmaker, who was born in 1926, one year before the first long-distance transmission of a live image with sound. He insisted that the agency can accomplish its broadband goals while still preserving free over-the-air television.
Senate Commerce Chairman John D. (Jay) Rockefeller, D-W.V., said Tuesday that he may pursue legislation to crack down on some controversial online marketing tactics that result in consumers paying for products and services they did not realize they signed up for or used. During a hearing on these aggressive online marketing methods, Rockefeller detailed the results of a committee investigation into the marketing tactics of three firms: Affinion, Vertrue and Webloyalty. "Tricking consumers into buying goods and services they do not want ... It's not ethical. It's not right and it's not the way business should be done," Rockefeller said.
The problematic transactions, detailed in a committee report, take place when a consumer is ready to finish buying a good or service online from a trusted retailer. Consumers are asked if they want a discount or reward and if they agree, they are often automatically signed up for the services offered by the three firms and charged a monthly fee. "For a few extra bucks in profits, these merchants pass their customers' personal billing information on to mysterious companies," Rockefeller said. Among the online retailers that have partnered with Affinion, Vertrue and Webloyalty or others include major companies such as US Airways, Continental airlines, Pizza Hut and Travelocity. The marketing firms and their online retail partners have made more than $1.4 billion from these tactics and have charged more than 30 million Americans, he added.
Ray France of Florida, a military veteran who served in Iraq and Afghanistan, was one of two consumers who testified at the hearing. He said he was unaware he had signed up for one of the services until he got a call saying his bank account was overdrawn. France was told one of these marketing firms had been withdrawing a monthly fee for a service he did not know he had signed up for when he used the Internet search services of a firm called Intelius.
Other senators at the hearing agreed with Rockefeller that legislation may be needed to address the problem. University of Minnesota Law School professor Prentiss Cox said there is an easy legislative fix: "Shut down the selling of access to consumers accounts" to other firms. As a result of the panel's probe, Affinion and Webloyalty have announced changes to their marketing practices.
Music industry officials and broadcasting representatives were expected to meet Tuesday afternoon to begin negotiations called for by key members of Congress over legislation that would require AM and FM radio stations to pay a new fee to performers and record labels. House Judiciary Chairman John Conyers, D-Mich., and Senate Judiciary Chairman Patrick Leahy, D-Vt., and other key lawmakers have requested that music and broadcasting executives come together on Capitol Hill to begin two weeks of negotiations on the issue.
Music industry representatives expected at the talks included Mitch Bainwol, president of the Recording Industry Association of America as well as officials from the American Federation of Musicians, the American Association of Independent Music, American Federation of Television and Radio Artists and the Rhythm and Blues Foundation, according to Martin Machowsky, a spokesman for the MusicFIRST coalition, which supports the radio royalty legislation. "We're pleased the discussion is happening," Machowsky said. "We're hopeful that they will be productive but that remains to be seen." He said he also expected some lawmakers and congressional staff to attend the talks.
National Association of Broadcasters spokesman Dennis Wharton said NAB Board Chairman Steve Newberry and NAB Radio Board Chairman Charles Warfield attended the talks for the broadcasters along with officials from the National Association of Black Owned Broadcasters and the Hispanic Broadcasters Association. "We are not characterizing (the talks) as negotiations," Wharton said, saying NAB officials agreed to attend the meeting out of deference to the lawmakers. "We hope to explain the devastating consequences of the legislation if passed." Meanwhile, NAB ran ads in two Capitol Hill publications Tuesday thanking the 252 House lawmakers and 27 U.S. senators for signing on to the Local Radio Freedom Act, a resolution opposing the radio royalty legislation.
Senate Commerce Chairman John (Jay) Rockefeller, D-W.V., has quietly urged the FCC to closely scrutinize Verizon's plan to unload its rural assets in 14 states -- including his own -- to Frontier Communications, a deal that critics insist would leave customers without the latest broadband technologies, Congress Daily's AM edition reported Tuesday. Rockefeller is reportedly so worried about the impact on his home state of West Virginia that he met late last month with Verizon Chairman and CEO Ivan Seidenberg and over the summer with Frontier Chairman and CEO Maggie Wilderotter to convey his concerns.
Rockefeller and other critics worry the pending $8.6 billion sale to the much smaller Frontier might play out as did two similar Verizon divestitures that resulted in the sale of rural telecom lines in Hawaii and northern New England to companies that went bankrupt. Rural carriers often lack the resources to deploy the sort of cutting-edge technologies the Obama administration sees as the backbone of a sweeping national broadband plan now being crafted by the FCC. "I am deeply concerned about the transaction and urge you to closely review the applications," Rockefeller told FCC Chairman Julius Genachowski in an Oct. 6 letter, obtained by CongressDaily. "Roughly one-fifth of West Virginia households presently lack access to broadband," the senator wrote, adding that a review of the deal should "consider how to remedy this situation."
The deal, approved so far by the Justice Department and regulators in California, Nevada and South Carolina, requires the backing of six more states and the FCC, which could issue its decision in the first quarter of 2010. To read more, click here. (Subscription required)
The latest comments to be filed on a study conducted for the FCC by Harvard University's Berkman Center for Internet and Society panned the study and urged the commission to give it little consideration. The comment period closed Monday for those wishing to provide input on the study by Berkman, which was charged with providing an expert review of existing literature and studies about broadband deployment policies pursued by other countries. The study is part of the FCC's efforts to craft a national broadband plan by early next year, as required by the economic stimulus plan. The Berkman study concluded that open-access policies, which require existing carriers to lease access to their broadband networks to competitors, have helped foster competition and innovation in broadband markets in other countries.
The National Cable and Telecommunications Association argued in its comments Monday that the commission should reject the Berkman report, saying it is biased in favor of the author's personal views. "A comprehensive, objective study of the existing literature regarding broadband deployment and adoption in other countries is something that could be valuable to the commission as it develops the National Broadband Plan requested by Congress," NCTA said. "Unfortunately, the report prepared by the Berkman Center is neither comprehensive nor objective."
In comments filed late last week, George S. Ford, the chief economist for the Phoenix Center think tank, said the economic analysis does not support the Berkman study's chief findings and is "embarrassingly bad." He added, that the study "claims that 'open access' stimulates broadband consumption, but the correct interpretation of its own evidence is that unbundling reduces broadband consumption."
A Senate Commerce Committee report released Monday on the eve of a Senate hearing on aggressive online marketing tactics claimed three firms knowingly charged millions of consumers for services they did not use or did not realize they had signed up for. The report is the result of a probe into the marketing tactics of three firms: Affinion, Vertrue and Webloyalty. The probe was launched after thousands of consumers complained to state attorneys general, the Better Business Bureau and consumer advocates about an enrollment process viewed as "misleading and deceptive," the committee said.
The practices at the heart of the report come into play when consumers are ready to buy a service or product online from reputable online Web sites and retailers, which have agreements with Affinion, Vertrue and Webloyalty. The three companies insert their sales offers when consumers have made their purchase but before the confirmation process is completed, according to the report. "These offers generally promise cash back rewards and appear to be related to the transaction the consumer is in the process of completing" and include misleading "yes" or "continue" buttons that may cause consumers to think they are completing their original transaction. Instead, they enter into a new transaction with Affinion, Vertrue, or Webloyalty, which charge a monthly fee after a free trial period unless consumers cancel, the report said.
The committee's report said internal documents show the firms know most consumers are unaware they have signed up for the firms' services and most cancel them after discovering the charges on their credit or debit cards. "One Webloyalty employee candidly commented in an e-mail that, 'at least 90% of our members don't know anything about the membership,'" the report said. The committee probe also claimed that some of the e-commerce sites that partner with the three firms know consumers are being deceived. The report said one company official acknowledged, "to generate more revenue through Webloyalty, it seems we must be more aggressive (and deceptive) in our marketing techniques." Some of the three firms' partners, however, have ended their relationships with Webloyalty Affinion and Vertrue or called on them to change their tactics, the report noted.
These aggressive sales tactics have been profitable, earning the three firms and their e-commerce partners a total of $1.4 billion, according to the report. Among the e-commerce retailers cited in the report as having partnered with the firms include 1-800-flowers.com, movietickets.com and restaurants.com.
In response to the report, James Hart, a senior vice president at Affinion, which announced new marketing guidelines Friday, said in a statement that his firm has "always complied with the highest standards and guidelines set for online marketers and are committed to continuously reviewing and updating those industry-best standards to ensure that our customers are always making fully informed decisions." A Webloyalty spokeswoman said the firm no longer uses many of the tactics described in the committee report. "We believe the changes we have made over the years and continue to make show that we are committed to learning from our experience and continuously improving the way we engage with consumers," Webloyalty CEO Rick Fernandes said in a statement.
A group of artists organized by the Copyright Alliance delivered a letter to the White House Monday urging the Obama administration to back policies supportive of artists' rights. "Our rights to control the distribution, use, and reproduction of our works in our vibrant digital age are dismissed by many who do not understand the value we bring to society," according to the letter signed by 11,000 artists, including authors, photographers, songwriters, graphic designers, filmmakers, musicians, Web designers, playwrights and others. "They tell us to work harder, create better, and give our works away."
The letter called on President Obama and Vice President Biden to "pursue policies supportive of the rights of artists and the encouragement of our creative efforts." It comes a day before the Copyright Alliance's third annual EXPOnential on Capitol Hill, a conference that will explore a range of copyright issues.
In other copyright news, the Electronic Frontier Foundation and Electronic Information for Libraries announced the launch Monday of Copyright Watch, a new Web site that aims to provide a comprehensive and up-to-date online repository of national and regional copyright laws. In citing the need to track copyright law changes, EFF International Policy Director Gwen Hinze said in a statement that, "Small shifts in the balance between the rights of copyright owners and the limitations and exceptions relied on by those who use copyrighted content can destroy or enable business models, criminalize or liberate free expression and everyday behavior, and support the development of new technologies that facilitate access to knowledge for all the world's citizens."
Intel and Newsweek released a joint survey Monday that examined public attitudes toward technology's role in the world's economy and found that many, including those polled in the United States, believe technological innovation is key to economic prosperity. The survey, conducted online between Sept. 28-Oct. 13, of 4,800 adults in Britain, China, Germany and the United States found that many doubt the United States can maintain its current technological leadership. In fact, 63 percent of Chinese believe China will overtake the U.S. lead in technology in the next three decades. At the same time, three out of four Americans surveyed agreed that technological innovation will be more important in the next 30 years but many doubt that Americans can maintain its technological edge. The survey found that 82 percent said the United States is lagging behind other countries in the quality of K-12 math and science education.
When asked how U.S. policymakers should translate these concerns into action, Intel Vice President of Global Public Policy Peter Cleveland said in an interview that "I think were trying to make a case for innovation." Among the policies that can help the United States maintain its innovation edge include permanently extending and increasing the research and development tax credit, he said. "We've fallen behind other countries," Cleveland said. "If the tax laws are not as beneficial here than that R and D will go elsewhere." In addition, he cited the need for increased investment in science, technology, engineering and math education, also known as STEM, and immigration laws that allow talented foreign nationals who graduate from U.S. universities to stay here. Many of these issues will be discussed at an innovation economy conference Intel is hosting in Washington Nov. 30-Dec. 1 featuring key Obama administration and congressional officials as well as business representatives.
In Monday's CongressDaily AM edition, reporter David Hatch outlines the problems with the Obama administration's grant program to increase broadband access and interest as part of the $787 billion economic stimulus plan enacted in February. Critics say extraneous fees and red tape are indicative of a larger set of flaws with the broadband stimulus program, which has drawn close scrutiny from Congress. The initiative is run by the Agriculture Department's Rural Utilities Service and Commerce's National Telecommunications and Information Administration.
Problems are considered most acute at the RUS, which sources said was included at the insistence of Sen. Tom Harkin, D-Iowa, then-chairman of the Senate Agriculture Committee who wanted to ensure the panel would have jurisdiction. The RUS, which for the past nine years has overseen an annual portfolio of broadband loans averaging nearly $700 million, is now doling out broadband grants and loans totaling $2.5 billion, raising questions about whether it is overwhelmed. A top aide to RUS Administrator Jonathan Adelstein insisted the agency is not in over its head, emphasizing its 60 years of experience in handling applications for federal assistance. Nevertheless, sources said political vultures already are circling, just waiting for the agencies to slip up.
The broadband funds are supposed to help extend high-speed Internet connectivity to areas that lack service, competition or the latest technology. Working under a rushed schedule, rules were crafted that critics view as unnecessarily complex, forcing applicants to first apply to the RUS, even if they'd rather deal only with the NTIA. After being inundated with 2,200 applications seeking $28 billion -- seven times the $4 billion available in the first round -- both agencies fell a month behind in announcing recipients and plan to begin the process in mid-December. Among the harshest critics are Democrats, including Senate Commerce Chairman John (Jay) Rockefeller, who are angry the Agriculture agency specified that only "remote" areas -- defined as beyond 50 miles from a city or town with a population of at least 20,000 -- are eligible for its most generous grants. To read more click here. (Subscription required)
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