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Nine major data brokers provide lawmakers with only a partial glimpse of industry controlling information on hundreds of millions of Americans
WASHINGTON, D.C. – A bipartisan group of lawmakers, including Reps. Edward J. Markey (D-Mass.) and Joe Barton (R-Texas), co-Chairmen of the Congressional Bi-Partisan Privacy Caucus, today released responses to letters sent to nine major data brokerage companies querying each about how it collects, assembles and sells consumer information to third parties. The companies –Acxiom, Epsilon (Alliance Data Systems), Equifax, Experian, Harte-Hanks, Intelius, Fair Isaac, Merkle, and Meredith Corp. – responded to lawmaker questions about policies and practices related to privacy, transparency and consumer notification. Data brokers represent a multi-billion dollar industry, aggregating information about hundreds of millions of Americans from both online and offline sources, which they then may sell to third parties for targeted advertising and other purposes. Consumers often have little knowledge of the existence of these companies.
Other signatories on the letters include Reps. Henry A. Waxman (D-Calif.), Steve Chabot (R-Ohio), G.K. Butterfield (D-N.C.), Bobby L. Rush (D-Ill.), and Jan Schakowsky (D-Ill.).
“The data brokers’ responses offer only a glimpse of the practices of an industry that has operated in the shadows for years,” said the lawmakers in a joint statement. “Many questions about how these data brokers operate have been left unanswered, particularly how they analyze personal information to categorize and rate consumers. This and other practices could affect the lives of nearly all Americans, including children and teens. We want to work with the data broker industry so that it is more open about how it collects, uses, and sells Americans’ information. Until then, we will continue our efforts to learn more about this industry and will push for whatever steps are necessary to make sure Americans know how this industry operates and are granted control over their own information.”
A copy of the responses to the lawmakers, as well as the original letters, can be found HERE.
Findings from the responses include:
Open Source Policy Versus the Last Telecom Monopolist by Daniel Berninger
Daniel Berninger
Founder, Voice Communication Exchange Committee
The founding of the Voice Communication Exchange Committee (VCXC)
offers a competitive alternative to the Federal Communication
Commission (FCC) and the first example of a startup addressing policy
questions. The decision to target the FCC reflects the government
agency’s status as the last monopolist on the telecom landscape and
the failure of other means of policy reform. The number of companies
regulated and the FCC’s funding doubled since the arrival of the
public Internet and VoIP in 1995. VCXC leverages the transition to
all-IP networks to setup an end game for the telecom regulator as the
100th anniversary of the first government intervention into telecom
arrives next year.
The FCC presides over a domestic telecom industry generating almost a
trillion in revenue and employing over a million people. The
relatively tiny FCC budget of $335 million and staff of 2000 indicates
either striking efficiency or a worrisome concentration of power. The
reality seems unlikely to be the former as there exists no company
among the 6000+ obligated to file the FCC Form 499 or public interest
advocate satisfied with the result. This type of performance usually
makes a monopolist irresistible for entrepreneurs, but startups do not
usually target government agencies. A plan for influencing government
usually involves paying a registered lobbyist.
VCXC applies the same means of disrupting the FCC as Linus Torvalds
applied in the case of the Microsoft operating system hegemony.
Publish the starting point for a competitive alternative and issue an
open invitation for incremental contributions. The open source process
benefits from the energies of people and organizations seeking relief
from an oppressive monopolist. Open source initiatives do not always
succeed and may even rarely succeed, but they do tend to advance the
cause of meritocracy. The collective impact of the open source
movement transformed the software business, and VCXC seeks to test the
approach on questions of governance.
The roots of telecom regulation in the US trace to an agreement
between AT&T President Theordore Vail and President Woodrow Wilson as
outlined in a December 19, 1913 letter from AT&T Vice President Nathan
Kingsbury to the Attorney General. The agreement settled an antitrust
complaint against AT&T and made America the exception as every other
country in the world nationalized telephone networks. The Kingsbury
Commitment represents the first example of a theme repeated over and
over in the subsequent 100 years – government policy makers recognize
the importance of communication as an input to economic and political
power and the resulting policy interventions tend to prove counter
productive.
The most successful communication policy also represents something of
an embarrassment and further illustration of the benefits of
non-regulation. The invention of the transistor at AT&T Bell
Laboratories in 1947 and the awarding of a Nobel Prize did not prevent
the Department of Justice from excluding the AT&T monopoly from
pursuing information technology revenue in a 1956 Consent Decree. The
FCC maintained a separation between the transistor driven
communication and information technology industries through the
Computer Inquiries in the 1960’s, 70’s, 80’s and through the Telecom
Act of 1996 as well as in rulings such as the Free World Dialup
Decision in 2004.
The nascent information technology industry regulators sought to
protect from the AT&T in 1956 now enjoys equivalent revenue, profits,
and 4x the collective enterprise value of the still heavily regulated
telecom industry. There exist no differences between the worlds of
information and communication technology sufficient to account for the
outcome aside from the relative benefits of regulation and
non-regulation. The expansion of information technology includes a
wholesale takeover of communication via the Internet and creates a
dilemma for the FCC VCXC seeks to exploit. The transition to all-IP
networks makes telecom and information technology indistinguishable.