Interactive TV: It's watching you

Privacy advocates warned consumers Tuesday of burgeoning dangers posed by the interactive TV industry, where companies are planning to collect massive amounts of personal data.

According to a report released Tuesday from the nonprofit Center for Digital Democracy, a raft of companies with interests in the interactive TV industry are creating technology to suck up data on viewers to better target advertisements or personalise programming -- despite a lack of privacy safeguards.

Companies such as Microsoft, AT&T, Liberty Media, News Corporation, AC Nielsen, Gemstar, Procter & Gamble and Young & Rubicam are among those developing software or investing in technology that can monitor consumer behaviour through interactive set-top boxes and personal video recorders, according to the report.

"Through the development of hardware and software, [many] companies are creating a new TV infrastructure in the United States that will engage in unprecedented data collection, along with new -- and potentially deceptive--marketing practices," Jeff Chester, executive director of the CDD, said in a statement.

Consumer profiling has yet to take off commercially on the Internet, where companies such as DoubleClick have been hatching similar plans without success for years. Nevertheless, as TV and the Internet meld within new devices, privacy advocates warn that such technology is poised to become a keyhole into the living room, offering marketers and others the potential for an uninvited glimpse of viewer lifestyles and habits.

Such data is expected to be a gold mine for technology providers, cable operators and TV programmers, which plan to sell targeted advertising to individual homes.

AT&T, for example, plans to conduct a test of interactive television advertising later this year by installing software in the homes of 30,000 of its digital customers in Colorado. The test will allow marketers to target ads to individual households, according to the report.

AT&T said the test will let the company use information on a household's demographics to send relevant messages from advertisers. For example, a household with a child may get a car commercial for a family car versus an ad for a sports car. This way, "advertisers get more return on the messaging", said Tracy Baumgartner, a spokeswoman for AT&T Broadband.

Addressing privacy concerns of such a test, she said that before the trial starts AT&T will send a letter to digital customers outlining the test and giving them the option to not participate.

"The key thing is AT&T broadband is concerned about customer privacy, and as we're looking at new interactive services, we're looking at them with customer privacy in mind," she said. "Right now, we're looking at three things: can you technologically do this, and what do customers [think] and advertisers think?"

Similar targeting and data collection is already under way. OpenTV announced a deal earlier this month with Predictive Networks, a marketing technology company, to begin building OpenTV's operating system for set-top boxes that incorporates profiling software.

In this case, Predictive said that its software does not associate personally identifiable information such as name and address with viewing habits.

Many such companies base their plans on consumers' approval to be tracked. But the report states that many others will neglect to give consumers proper notice of data-gathering practices or give them the right to opt out.

In its report, the CDD is calling for legal protections for consumers, including extending provisions in the Cable Communications Policy Act of 1984, which shields consumers from the collection and use of viewing habits without permission over cable TV. An extension would include protections for consumers using satellite and telephone-based systems for interactive TV. The group also recommends that interactive TV manufacturers build privacy protections into their products.

Other privacy groups have decried interactive TV technology for privacy concerns. In March, the Denver-based Privacy Foundation released a report criticising digital set-top provider TiVo for misleading consumers about its data-gathering practices.

The company had said that it monitors consumer behaviors but does not connect personally identifiable information to the data.

Privacy advocates said such practices deserve more scrutiny.

"The American public is not being given an opportunity to decide whether such technology and interactive advertising campaigns should be permitted to enter their homes," Chester said.