The dark side of the digital home

But we may not.

As our own homes go digital, life may start looking less like the Skypad Apartments, and a lot more like something out of "Blade Runner."

The foundation is being built. A majority of U.S. households now have PCs, and home networks connecting PCs to each other and to other devices are growing quickly.

Telecommunications companies comply with 1994 legislation making wiretapping and tracking of individuals easier. Hybrid Internet TVs are offering viewers and advertisers the ability to have programs and ads tailored to their personality.

"The wonderful convenience systems in our homes require lots of information about us. The question is where that information will be kept," said Beth Givens, program director at the Privacy Rights Clearinghouse, a consumer group. "If it is kept within our home, fine. But my guess is it won't stay there."

Meet George Jetson
This year is still young, but already several new technologies have roiled the privacy waters:

Intel Corp. (Nasdaq:INTC) has put electronically accessible serial numbers on its mainstream PC processors.

Intel calls it an e-commerce home run, but privacy experts cry foul and boycott the company's products.

Sun Microsystems Inc.'s (Nasdaq:SUNW) Jini networking platform will tie home and office devices together.

Sun says that no privacy issues exist, but others aren't so sure.

Microsoft Corp. (Nasdaq:MSFT) unveiled its Universal Plug and Play initiative, a Jini rival that will tie together home appliances.

Included in Microsoft's home of the future: A camera for checking on visitors via the network, a collar that can track pets and a TV that knows what programs the viewer likes.

Creepy? "No one has ever called it that," said Steve Guggenheimer, Microsoft's digital TV group product manager.

Perhaps someone should call it creepy. After all, the potential will soon exist for your own house to spy on you. Some see this as a hint of what may be a future without personal privacy.

"We are just starting to see the dark scenarios imagined by Orwell and Huxley," Givens said.

Reality bites
Of course, a slew of information about consumers already exists in corporate databases everywhere. Sun CEO Scott McNealy, speaking at the Jini bash, drove the situation home: "You have zero privacy now -- get over it."

But privacy advocates are not getting over it, in part because of the Internet. They see ever more information about consumers' lifestyles leaking out through Internet connections, wireless phone records and credit card receipts.

"There are currently almost no laws that protect privacy on the Internet," said Dave Banisar, policy director at the Electronic Privacy Information Center, an electronic-rights watchdog.

Banisar has called attempts by Microsoft and other companies to alleviate consumer concerns "more public relations than privacy protection."

Legitimate business needs
Companies need information, particularly to give out credit cards and make loans.

"We are dealing with faceless institutions all the time," said David Brin, well-known science fiction author and eccentric futurist. "In order for them to trust you, they need a certain amount of information."

That's what Intel's chip ID scheme hoped to target -- ensuring users were who they said they were.

Second-use principle
The problem is that companies often collect information for one reason, then find other, profitable, ways of using it. This is so commonplace that privacy experts have a name for it: 'the second-use principle.'

Observers says that when it comes to second-use, companies seem to be aiming for the floor, rather than the ceiling, in setting privacy policy.

For instance, credit card company American Express last year had plans to sell consumers transaction data to marketers, and backed off only after public outcry; the company now sells names by category. Likewise, Internet service provider ran into similar grassroots concern when it discussed plans to sell its customers names.

Microsoft couldn't escape either. The Redmond, Wash. giant's interactive TV subsidiary WebTV Networks Inc. got lambasted by privacy groups for alleged privacy violations last October.

Think the government is more restrained? The legislatures of Florida, South Carolina and Colorado sold digital driver's license photos for a penny each. But the state governors canceled the contract after receiving more than 14,000 e-mailed complaints.

Feeling nervous
It's no wonder, then, that consumers are nervous about their privacy, particularly online.

A Business Week survey of online consumers last year found their top worry was privacy. Four out of five people surveyed by the Federal Trade Commission said they were worried about what happens to the information collected about them online [only 6 percent said they'd actually experienced privacy abuses].

In fact, complaints about unwanted offers and information-collection practices has the FTC keeping a keen eye on the direct-marketing industry.

Citing lack of privacy standards on the Web and a June 1998 report showing that 92 percent of a representative 1,401 sites collect identifying information about surfers, the FTC has called for companies to shape up -- or face legislation.

Currently, more than two dozen privacy-related bills are being considered by Congress.

Harm? What harm?
The information industry argues that laws are not needed. Self-regulation will work, said Chet Dalzell, spokesman for the Direct Marketing Association, the $1.4-trillion industry behind the "hands-off" policy of the Clinton administration in regard to the Internet.

"Legislation has been historically targeted at only a few areas that pose harm to the consumers," he said.

For DMA members, more access to consumer information means more effective ads, said Dalzell. Companies that sell access to their lists generally do so for $50 to $200 per 1,000 names in a single targeted mailing. Other companies may choose to blanket consumers with spam.

They are getting that information every way possible: From credit card transactions, through service providers, and of course, off the Internet.

In the end, their quest for information, coupled with the influx of digital technologies into the home, may mean companies will be watching us -- just as we watched the Jetsons.