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AT&T to take on Google to be king of mcommerce: privacy advocate

The Center for Digital Democracy has sent a letter to the Federal Trade Commission, the Federal Communications Commission and members of Congress to block the pending merger of AT&T and T-Mobile, claiming the deal is not about competition and broadband access, but rather a ploy to rule the mcommerce arena.  

The CDD alleges that the forthcoming dramatic increase in location services and targeting will enable AT&T and others to know every move and mobile action their customers literally make. The CDD also filed a complaint regarding mobile marketing and privacy with the FTC in 2009, issues that commission is beginning to address.

?What regulators don?t understand is that the real drivers of this [AT&T/T-Mobile] deal are mobile advertising, mobile marketing and mobile commerce,? said Jeff Chester, executive director of the CDD, Washington. ?It is not about adding subscribers?it is to position itself to dominate the explosion of revenues we are going to see as mobile becomes the key platform for everything.

?[Regulators] are looking at competition, but they are not looking at privacy and consumer protection issues, which they need to do,? he said. ?Will they be creating mobile profiles?

?We are demanding that investigators peel back the façade that this deal is about competition and broadband access and realize that AT&T wants to take on Google and be the king of mobile commerce.?

The CDD believes that Isis, a joint venture between AT&T, T-Mobile, Verizon Wireless, Discover Card and Barclaycard, is incredibly important.

Mr. Chester questions how AT&T will use all of the data from the Isis program, how it will be safeguarded in the cloud and whether it will be able to tap into the granular data about people?s financial behavior.

?Mobile marketers claim they are concerned about privacy, but they have designed a set of practices to ensure that consumers click to opt-in to data collection, and that is not the way privacy should be collected in the mobile environment,? Mr. Chester said.

?The [AT&T/T-Mobile] merger, as you know, is really designed to help AT&T take advantage of the dramatic changes transforming how we use online services, which will increasingly be done by mobile devices,? he said. 

?We want the FTC involved?not just FCC and Department of Justice?to ensure the privacy and mobile consumer protection issues are addressed.?  

Here is the letter that the DCC mailed to the FCC, the FTC and various members of Congress:

April 18, 2011

Hon. Jon Leibowitz
Chairman Federal Trade Commission
600 Pennsylvania Avenue, NW
Washington, DC
20580

Hon. Julius Genachowski
Chairman Federal Communications Commission
445 12th Street, SW
Washington, DC
20554

Dear Chairmen Leibowitz and Genachowski:

We respectfully request your agencies to address the privacy and consumer protection issues raised by the acquisition of T?Mobile by AT&T.

As you know, mobile and location marketing are quickly reshaping the digital landscape, unleashing a powerful data collection and hyper?local targeting system.

A broad range of individual consumer data, involving their finances, health interests, Web browsing, instant messaging, and location, is increasingly gathered.

By combining both the subscriber and ?mobile Web? actions of its 130 million subscribers, a combined AT&T and T?Mobile will be able to harvest and act upon deep insights gleaned from their users? behaviors, location, spending patterns, and social actions.

Driving this deal is a recognition that mobile phones are ushering in a significant transformation of how consumers navigate the Internet, allowing for unprecedented merging of online, offline, and location information on a consumer.

Mobile phones are becoming always?on sensors, creating a full 360?degree view of people?s mobile consumption.

While mobile marketing practices raise concerns from others in the industry, we believe that the specific practices of AT&T, in the light of its proposed T?Mobile deal, should be scrutinized and addressed by policymakers.

Through its combination with T?Mobile, AT&T will have access to greater amounts of financial information on subscribers as they engage in mobile commerce.

Among key issues that must be addressed are the storage of consumer data in the ?cloud,? and the flow and capture of data from users, applications, and mobile marketers.

Mobile marketing poses serious privacy threats to consumers, who have to maneuver through an array of digital applications designed to foster consent for far? ranging data collection practices.

For example, AT&T plays a lead role in developing the inadequate Mobile Marketing Association framework that relies on a host of techniques to solicit data from mobile users, including so?called ?Click?to?call, Click?to?buy, Click?to?SMS, Click?to?locate, and Click?to?Video.?

AT&T has also recently expanded its locational ?geo?targeting? through the use of ?Geo?fences? that deliver a ?virtual perimeter around a retail location, event, or any geographic area.?

They are the ?the first US mobile carrier to offer a large?scale, location?based mobile marketing program? that uses so?called ?ShopAlerts.?

Consumers receive ?valuable offers, rewards, and coupons based on their specific geographic location?enhanced with information such as weather, traffic, and local shopping area details.?

ShopAlerts are targeted via ?Mindset Messaging, tailored dynamically based on place, day, time, and CRM or loyalty data in order to deliver the most relevant messages to your customers in the optimal mindset to take action.?

In addition, AT&T will have access to ?location-­?based analytics? that measure how its targeted users have responded to these mobile marketing campaigns.

It will also likely be able to obtain additional insights via relationships with ?third-­?party ad servers,? including DoubleClick.

How AT&T operates its geo?targeting services, including how it ensures and secures meaningful opt?in and consumer control of their data, and what it collects via ?location analytics,? must all be thoroughly examined by regulators.

So, too, must the impact on competition of this proposed deal be assessed, given the current AT&T, Verizon, and T?Mobile alliance with its ISIS mobile payment service.

ISIS, which includes Discover Financial Services, will allow these carriers to harvest ?real?world purchase? data from more than 200 million wireless subscribers.

But plans for the joint venture go beyond mobile commerce, to ?create a mobile wallet that ultimately eliminates the need for consumers to carry cash, credit and debit cards, rewards cards, coupons, tickets and transit passes.?

AT&T also has deals with mobile billing companies BilltoMobile, Boku, and Zong.

We ask you to assess how the data collected from the partnership?s ?nationwide mobile payment network? will be used in mobile targeting, including the role of near field communication (NFC) technology.

AT&T has also invested in mobile tracking services, such as barcodes, designed to ?measure the consumer response in real time.?

The merger?s impact on children and youth should also be evaluated.

AT&T has already experimented with mobile tracking technologies that are being used to target this vulnerable audience.

Google also is engaged in this marketplace, as are others.

Mobile marketing is quickly transforming the digital landscape.

By the end of 2011, over half of all Americans will have a smartphone.

According to Advertising Age, AT&T will have the largest share of the U.S. smartphone market if it acquires T?Mobile.

Mobile ad revenues in the U.S. are predicted to generate $5 billion by 2015, with a significant share spent on targeting consumers at the local level.

As more Americans rely on their cell phones to conduct their personal and business affairs, it is critical that any merger of this significance trigger serious scrutiny on how it impacts both their privacy and consumer welfare.

AT&T will have even more small and large business and consumer data available to use for its mobile advertising business after it acquires T-­?Mobile.

?AT&T Interactive is building the biggest and best hyper local ad network focused on mobile engagement,? the company notes, with ?hundreds of million monthly visitors.?

Your agencies should also examine the impact of this transaction on the data collection and mobile marketing practices of both AT&T and Apple.

Consumers must know how the two companies will share their information, including for "apps" and iAd data targeting.

Ensuring the mobile privacy of iPhone and other mobile consumers using AT&T services should be a priority during the merger review.

We look forward to working with your agency to help ensure U.S. consumers are protected while using their mobile devices.

Respectfully,
Jeff Chester
Exec. Director
Center for Digital Democracy
Washington, DC
20005

cc: Sens. Patrick Leahy, Herb Kohl, Chuck Grassley, Al Franken, Jay Rockefeller, Mark Pryor, Roger Wicker, John Kerry, John Ensign, and Reps. Fred Upton, Henry Waxman, Ed Markey, Joe Barton, Mary Bono Mack, G.K. Butterfield, Greg Walden, Anna Eshoo, and Hon. Christine Varney, Department of Justice Antitrust Division

Final Take
Jim Stapleton, head of sales and account management at Isis