The Future of Privacy

Magnifying glassThe FCC is considering new privacy rules for ISPs. The FCC is considering treating ISPs in the same way they have historically treated telcos. Telco customers have had the ability for years to opt out of having the telephone company use their data for other purposes. Most people don’t even remember this, but when you bought your last landline the telco was supposed to ask you if they can use your contact info for marketing their own products or if they can sell your information to outside companies.

But a telco doesn’t know much about you other than your phone number and who you call. Telcos have never really ‘mined’ telephone calling data and that was what made Edward Snowden’s revelations about the NSA so startling. The NSA demonstrated the ability to draw conclusions about people according to who they call.

But the data that an ISP collects from you as a customer can tell them almost everything about you. They know everything you do on the web – your social network connections, what you search for and buy online, and what you write in every email or messaging system. And – if they wanted to – your ISP could know truly private things about you, such as what illnesses you might have, if you are happy or unhappy in your relationships, or if you do anything that would embarrass you (like looking at pornography).

So the FCC wants to give customers the right to tell their ISP to not examine or use their personal data. Under the FCC’s proposed rules customers can opt out of ISP surveillance completely, or can allow their ISP to use their data in some less intrusive manner, yet to be defined.

It’s an interesting concept, because your ISP is the only entity online that knows everything about you. One would certainly hope that any such rules would apply equally to cellphone ISPs in the same manner as wireline ISPs.

These kind of privacy rules would certainly put the brakes on the money that ISPs can make from mining data about their customers. We recently saw AT&T introduce the idea of charging more to customers to avoid deep data mining – making the default condition one of being monitored.

But the FCC is not going to put these same restrictions on what they call edge providers – meaning every service on the web. Facebook or Google would be free to use whatever they know about you, with the reasoning being that people use these services voluntarily.

There is another big privacy issue looming in the near future – and that’s the surveillance that is coming from the Internet of Things. There is an amazing amount of data that can be gleaned from monitors in our home. Health monitors are going to record details about you that you don’t even know about yourself. Various monitors around the home in the form of smart locks, smart cars, motion detectors, sleep monitors, etc. are going to monitor details about you (and the other people in your home) and how you live. Those details can then be sold to data companies that will combine data from multiple sources to paint a detailed picture of what you do and when you do it. Supposedly this will be done in order to personalize advertising for you, but it’s hard to believe that companies won’t take this a lot further and use this data in unsavory ways.

Already today there are data depositories buying raw data from a number of web sources that can paint a pretty good picture of who you are. Even without the ISPs being part of the data-gathering chain it’s likely that privacy is going to become largely a thing of the past.

There are a lot of people that don’t want to be watched so closely and I think we are going to see a new industry that strives to protect you from detailed monitoring. But when I see how extensive the data collection already is today, I fear that really removing yourself from data surveillance is going to be expensive and not available to most people.

I suspect my feelings towards privacy are typical. It makes me uneasy to have companies monitoring me and I find personalized advertising to be creepy. But as our world comes to rely more and more on devices that make our lives easier, it’s not hard to see that our current feelings about privacy are probably going to become quaint anachronisms of the past.

The Story of the Numbers

I ran across some interesting statistics from the Leichtman Research Group. They track a lot of basic industry statistics and the ones I found most interesting are summaries showing the number of cable and data customers at all of the largest carriers in the industry. Consider the following table that I have created from their statistics:

Data Customers 2013 2012 2011
Comcast 20,662,000 19,366,000 18,143,000
Time Warner 11,606,000 11,395,000 10,909,000
Charter 4,640,000 4,269,000 3,946,000
Cablevision 2,740,000 2,723,000 2,633,000
Suddenlink 1,059,500 1,002,100 948,700
MediaCom 965,000 915,000 851,000
Cable One 472,631 459,235 451,082
Major Cable 42,145,131 40,129,335 37,881,782
AT&T 16,425,000 16,390,000 16,427,000
Verizon 9,015,000 8,795,000 8,670,000
CenturyLink 5,991,000 5,851,000 5,659,000
Frontier 1,836,000 1,724,000 1,702,000
Windstream 1,170,900 1,214,500 1,207,800
FairPoint 329,766 324,977 312,745
Cincinatti Bell 268,400 259,400 257,300
Major Telco 35,036,066 34,558,877 34,235,845
Major Carriers 77,181,197 74,688,212 72,117,627
Cable Customers 2013 2012 2011
Comcast 21,690,000 21,995,000 22,331,000
Time Warner 11,393,000 12,218,000 12,743,000
Charter 4,342,000 4,158,000 4,314,000
Cablevision 2,813,000 3,197,000 3,250,000
Suddenlink 1,177,400 1,211,200 1,249,000
Mediaom 945,000 1,000,000 1,069,000
Cable One 538,894 593,615 621,423
Major Cable 42,899,294 44,372,815 45,577,423
DirecTV 20,253,000 20,084,000 19,885,000
Dish 14,057,000 14,056,000 13,967,000
DBS 34,310,000 34,140,000 33,852,000
AT&T 5,460,000 4,536,000 3,983,000
Verizon 5,262,000 4,726,000 3,981,000
Major Telco 10,722,000 9,262,000 7,964,000
Major Carriers 87,931,294 87,775,815 87,394,423

This table only looks at the major carriers, but in this country that is almost everybody. For example, missing from the table of cable customers are all of the other providers, who altogether only have 7% of the total cable market.

There are some interesting things to notice about these statistics:

  • The number of high-speed data customers continues to grow and the major providers added 2.5 million more customers in both 2012 and 2013.
  • The major cable companies either have or soon will have more data customers than cable customers. This explains why they now view themselves as ISPs who happen to sell cable.
  • The cable companies lost 2.7 million cable customers from 2011 to 2013. This may have more to do with service and competition than anything else since AT&T and Verizon picked up 2.7 million cable customers during that same time period.
  • The Comcast / Time Warner proposed merger is gigantic since those two firms are two of the top three data providers today and two of the top four cable providers.
  • As much effort as the satellite companies expend in advertising they are barely growing. Dish Networks, for example added a net 1,000 customers in 2013.
  • A few companies are really bleeding cable customers and Cablevision and Cable One both lost 14% of their cable subscribers over a two year period. Even Time Warner lost 11%.
  • As well as AT&T and Verizon have done in cable, together they have only grown to be 12% of the cable market.
  • The fastest growing ISPs over the two-year period are Charter (17%), Comcast (13%) and MediaCom (13%).