Telcos and Customer Info: Why Free Reign Data Selling Should Be Prohibited

This article originally was published on MarTech Advisor.

Maciej Zawadzinski, CEO of Piwik PRO discusses that it’s never been more challenging for advertisers and marketers to break through the massive amounts of noise both on and offline. Consumers largely tune out irrelevant messages and move seamlessly between channels and devices. Therefore, brands today are scrambling to find better ways to market one-to-one with consumers.

Data privacy and security are hot button issues that dominate headlines and conversations largely related to the recent US presidential election. One of the more recent contentious issues was a bill that aimed to roll back regulations and allow telcos (ISPs and phone companies) to sell customer data such as web browsing history to third-party advertisers. Both the U.S. House of representative and Senate voted to erase the FCC regulations – leaving the final decision up to President Trump. Politics aside, there are several reasons that unrestricted selling of customer data by telcos is wrong.

What’s at stake?

It’s never been more challenging for advertisers and marketers to break through the massive amounts of noise both on and offline. Consumers largely tune out irrelevant messages and move seamlessly between channels and devices. Therefore, brands today are scrambling to find better ways to market one-to-one with consumers. To target consumers with personalized content both accurately and at scale requires massive amounts of data. As such, the voracious appetite by marketers for insights into consumer behavior has made data as valuable as physical currency – quite literally for telcos and other companies that have mountains of data to sell.

Is collecting and using customer data all that bad?

In short, no. The simple fact that marketers obtain and use consumer data (or the fact that the data is available in the first place) is not the nefarious part of the equation. David Pogue penned an interesting article six years ago that talked about the overblown nature of privacy concerns in many cases of internet usage. The benefits for consumers of trading data for convenience, deals, or better experiences aren’t just theoretical either. According to recent data from Salesforce, “fifty-seven percent of consumers say they’re willing to share personal data in exchange for personalized offers or discounts. Additionally, consumers will share personal data in exchange for product recommendations that meet their needs (52%) and personalized shopping experiences (53%).”

What’s the issue then?

The contention really lies in the process of selling consumer data, especially by telcos, and what happens to the data afterwards. In Pogue’s 2011 article, he wrote, “Facebook has amassed the largest database of personal information in human history (more than half a billion people).” Today, the rich data sets owned by telcos rival – if not exceed those of Facebook and Google, which is mind-boggling. Again, selling this data to advertisers and marketers is potentially very profitable for telcos, but there are major differences between a marketer’s first-party data (which still has privacy concerns), and the data telcos have at their disposal to sell. Here are three compelling arguments for why telcos should not have free reign to sell customer data.

1. It violates consumers’ basic right to privacy

Telcos have sensitive data that includes customer demographic profiles, which may or may not be enough to piece together and identify a specific individual. However, even more profound, they have access to the location of customers 24/7, as well as text messages and phone conversations that could be used to build rich customer profiles. Unlike with Facebook and other social media sites where users knowingly share information (and consent to when signing up), consumers have no idea or control over what information is being shared when a telco sells their information to a third-party advertiser. According to research by Truste, the top cause of concern by consumers is the possibility of companies sharing their personal data with other companies.

2. There’s no way to opt out or create a new identity

In theory, consumers can easily delete online cookies and essentially create a ‘new identity’ each time they go online. In practice, it’s more complicated than that, and there have been major cases and fines levied against telcos and marketing analytics companies for use of ‘supercookies’ that tracked consumers even after opting out. The issue with telco data even beyond cookie tracking is that consumers are more or less tied to their phone number permanently and can’t easily create a new identity or have a fresh start. Similarly, consumers can’t block telcos from tracking them as they do with other third-party advertisers by installing an ad blocking software on their browser.

3. Potential for abuse of data once it’s sold

In his article, Pogue does cede that, “There are some good reasons to protect certain aspects of our privacy, of course. We would never want our medical or financial details to keep us from getting a job — or a date. We might not want our sexual exploits or our voting patterns made public.” This is the biggest area of concern for telcos selling data and why efforts to roll back regulations are wrong. Once data is sold to a third-party advertiser, there’s no further way to track whose hands it will fall into next. Telco data includes demographics, mobile locations, movements, web browsing habits and more. Any of this, especially PII (personally identifiable information) that can be used to identify a specific individual, could be misused by third parties (e.g. to discriminate in healthcare/insurance, conduct surveillance, commit online fraud, and even voter suppression).

What’s the solution?

The debate over telcos and consumer data privacy isn’t likely to go away anytime soon. Time will tell how the battle between the FCC and the House bill to roll back regulations pans out. There is currently an online petition to stop the bill. In Europe, things are shifting heavily in favor of consumers with the new GDPR taking effect in 2018, which will also have implications for US companies (and subsequently brand marketers) doing business in Europe. Whatever happens, telcos will almost certainly keep fighting and navigating regulations for the right to sell data as a way to generate revenue. A consumer deciding to not use telcos is unrealistic, but the answer however is not the direction the current House Bill wants to take. Whatever the outcome, if telcos selling data is not outright forbidden, the common sense, most basic guidelines must include:

• Clear communication to consumers that their data will be sold or shared, and the potential for the data to end up with other third parties besides the direct purchaser.
• Allowing customers to opt out. One idea would be for telcos to offer something in return like free data packages (going back to willingly trading data for a benefit).
• Always protecting the sensitive data of a customer and never selling PII (individual profiles or personal data) but limiting it to larger demographic info that can’t be tied to a single person and potentially used to discriminate.

The bottom line is that the majority of consumers say they avoid companies that do not protect their privacy. As consumers become more educated about data privacy issues – especially as they continue to generate news headlines – there will be far ranging implications and consequences for telcos and advertisers to wrestle with. This includes legal ramifications, but perhaps most importantly, consequences regarding brand trust and loyalty amongst their customers, and overall reputation in today’s highly competitive marketplace.