Charter freezes its online ad program over privacy fears

Charter Communication Inc., the leading U.S. cable company, said Tuesday that it is droppins its plans to sell the Web use of some high-speed Internet subscribers to an advertising company, citing concerns raised by its customers.

In May, the St. Louis-based cable provider launched a pilot program in four markets, including San Luis Obispo, Calif.; Fort Worth, Texas; Oxford, Mass.; and Newtown, Conn. The plan was aimed at collecting information on its customers' online surfing habits and directing them to third-party advertisers.

But Charter spokeswoman Anita Lamont said Tuesday that the company has suspended its plans to launch the service as some customers have raised concerns.

The company’s decision not to move forward with its pilot program follows an array of criticism from some privacy advocates and from two members of Congress who last month urged Charter CEO Neil Smit to consider their plan before implementing it.

"As we do with all new service launches or initiatives, we conducted focus groups well in advance, which told us that most broadband consumers would look upon this service favorably," Charter said in a statement.

"However, some of our customers have presented questions about this service as well as suggested improvements," the statement added. "We will continue to take a thoughtful, deliberate approach with the goal to ultimately structure an advertising service that enhances the Internet experience for our customers and addresses questions and concern they've raised."

Charter was working with NebuAd, a Redwood City, Calif.-based online advertising company, on its trial pilot plan. In a response to privacy concerns raised by people and privacy advocates about the plan, NebuAd, which has arrangements with several smaller Internet providers, says that this can all be done protecting the anonymity of users.

However privacy advocates disagree NebuAd’s such claims. Attorney General Richard Blumenthal the practice may have "serious legal and privacy implications" and violate federal law.

Overwhelmed with Charter’s decision to drop the plan, Rep Ed Markey, a Massachusetts Democrat who chairs the U.S. House of Representatives' subcommittee on telecommunications and the Internet, said in a statement: "Given the serious privacy concerns raised by the sophisticated ad-serving technology Charter Communications planned to test market, I am pleased to hear that the company has decided to delay implementation of this program."

Although the fourth-largest cable operator has decided to temporarily freeze the program, but it will continue to look at some kind of advertising service like this, Lamont said.