• by Wendy Davis , Staff Writer @wendyndavis, April 28, 2015

In February, when AT&T said it was going to roll out a 1 GB fiber service in Kansas City, the company announced that the price of service will depend on consumers' willingness to be tracked for ad-targeting purposes.

People who accept AT&T's ad targeting -- which the company calls the “Internet Preferences” program -- can purchase 1 GB service for $70 a month. People who don't want to participate in Internet Preferences will be charged $99 a month for the same 1 GB service.

The company uses a similar pricing model in Austin, where it has operated a high-speed U-verse network since late 2013. These pricing plans are controversial, with critics arguing that AT&T is turning privacy into a luxury service.

Today, AT&T senior vice president Robert Quinn defended the company's decisions by suggesting that AT&T must charge a privacy premium in order to compete with Google, which recently began offering 1 GB fiber service in Austin, Kansas City and other neighborhoods.

“We have to be able to compete with people who are subsidizing their services with advertising revenue,” he said this morning at a Federal Communications Commission workshop on broadband privacy.

Google doesn't use deep packet inspection to collect Web-surfing information from its broadband subscribers in order to serve them ads. But the company obviously garners ad revenue in other ways.

Quinn added that AT&T's pricing was no different from that of developers who offer free, ad-supported apps and paid apps without ads.

What's more, he argued, AT&T's pricing plan was actually more privacy-friendly than business models used by certain “tech companies” that don't give users a choice between ad-supported and non-ad-supported models.

What Quinn didn't say is that users of most Web services can take matters into their own hands by deleting their cookies, or using extensions that prevent tracking cookies from being set, or otherwise configuring their browsers to prevent tracking. But broadband users can't do much to prevent their providers from using deep packet inspection technology.

Tracking by broadband providers has been controversial since at least 2007, when NebuAd began partnering with Internet service providers to use deep packet inspection to track subscribers and serve them targeted ads.

Privacy advocates have argued since at least that time that broadband providers should obtain users' opt-in consent before collecting their browsing data, given that providers have access to everything consumers do online.

But Quinn suggested today that Internet service providers like AT&T don't necessarily know more about their customers than other companies. He said that many mobile users access the Web through WiFi networks, as opposed to AT&T's data network; the company can only track mobile users when they're on AT&T's network.

Quinn also argued that Web companies and app providers can collect a huge amount of data -- including people's precise locations, search histories and Web-surfing activity -- and then combine that data with personally identifiable information provided by data brokers.

He added that any regulations that were aimed just at broadband providers, and not other Web companies, could give consumers “a false sense of security” about the privacy of their data.

The FCC convened today's workshop as a first step toward determining how to apply privacy rules to broadband providers. While the FCC has developed regulations aimed at protecting the privacy of telephone users, the agency says those restrictions won't necessarily translate to broadband, given the vast amount of Web-browsing data available to providers.