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Summary:

Today on the Verizon Policy blog Link Hoewing writes about the results of an academic research paper that looks at the effectiveness of “shaming” corporations into behaving properly. The research examines how companies respond to social pressure related to environmental causes, and shows that companies tend […]

Today on the Verizon Policy blog Link Hoewing writes about the results of an academic research paper that looks at the effectiveness of “shaming” corporations into behaving properly. The research examines how companies respond to social pressure related to environmental causes, and shows that companies tend to improve their behavior after receiving poor rankings from independent social ratings agencies.

Hoewing uses that research to argue that self-regulation works, because it is in the best interest of the company to listen to its customers. He brings up the current issues of online privacy, where ISPs have turned to firms such as Phorm or NebuAd to profit by selling advertisements served up based on where a customer surfs:

Interestingly, a couple of years back during the debate on net neutrality, I made the argument that industry leadership through some form of oversight/self-regulatory model, coupled with competition and the extensive oversight provided by literally hundreds of thousands of sophisticated online users would help ensure effective enforcement of good practices and protect consumers.

So far that really hasn’t worked out. There are two problems with this argument for ISP self regulation. The first is that there’s little competition, meaning customers can’t vote with their feet if an ISP is abusing their privacy. Second, there’s no real transparency into who’s using such services, unless an independent agency is able to find out about it.

So, as the ISPs want to offer up their own regulations for handling your privacy online, beware of this line of thinking that says industry self-regulation will work. If carriers could be shamed into doing the right thing, AT&T wouldn’t be helping the government listen in on our phone calls.

  1. Hoewing trots out the same old free-market, deregulatory rhetoric as if the last two weeks of stock market dips and financial sector bailouts never happened. Seems the folks at Verizon need to rethink their talking points.

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  2. I’m getting a little sick and tired of allowing industry to self-regulate. The ISP’s have every intention of monetizing your click habits, and as for ‘shaming corporations’, remember what Alan Greenspan said about derivatives? Greenspan entertained no talk of regulation, describing the financial turmoil as the failure of Wall Street to behave honorably.

    “In a market system based on trust, reputation has a significant economic value”

    He couldn’t have been more wrong

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  3. Stacey maybe it was shame that prevented Verizon from moving ahead and working with Phorm type companies, or perhaps it was a better understanding of how and what things will get even paid-for politicans pissed off in Washington DC. I would love to believe that the leopard has changed its spots — this new research shows how they could be white washing their past — but then I wasn’t born yesterday.

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  4. I’m not sure that NebuAd and Phorm are very good examples. NebuAd got skewered, but it was NebuAd’s ISPs (not NebuAd) that violated their customers’ privacy (and also escaped death by magnifying glass). Had clear privacy laws or regulations been in place, the ISP’s customers and NebuAd’s investors and employees would have avoided being hurt by the scandal.

    Even worse as an example — Phorm — which is going forward with their U.K. plans on 3 major ISPs despite all of the negative press and consumer requests to stop.

    Shame is the unfortunate product of a mistake. While it has a learning component, it certainly would be better to keep people from getting hurt in the first place.

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  5. [...] making such systems opt-in. Today, Verizon PR man Link Hoewing posts to the Verizon blog (via GigaOM) to say that Verizon believes that new privacy rules aren’t necessary, because public shame [...]

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  6. The best possible outcome of this shame strategy is a series of vigilante actions where one-sided efforts from the ISPs to deal with issues of misinformation, pornography and copyright theft result in one-sided solutions where the consumer gets the short end of the stick.

    I think there need to be rules, and they need to be enforced.

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  7. [...] making such systems opt-in. Today, Verizon PR man Link Hoewing posts to the Verizon blog (via GigaOM) to say that Verizon believes that new privacy rules aren’t necessary, because public shame [...]

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  8. Fortunately, US Congress is well aware of the issue and essentially shut down some initial plans by US firms to spy on millions of consumers via our major ISPs. Unfortunately, the US ISPs weren’t the ones self-policing the privacy environment.

    The root cause of this is a complicated amalgamation of technology keeping pace ahead of standards setting bodies and well, cold hard cash. Yes, at the end of the tunnel is an enormous revenue opportunity that is 100% advertising based – and represents the most insidious advancements in behavioral targeting technology ever.

    For a more in depth discussion on the ad components driving this debate:
    http://www.blog.anchorfree.com/news-events/shielding-consumers-from-privacy-breaching-isp-tracking/

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  9. How quaint.
    The continued spew of the Lefty talking-point, making sure EVERY opportunity for increased government regulation is covered, no matter how irrelevantly, with a reference to the current economic troubles.

    Never mind that the article even notes on one hand that the government is the scary one doing the spying on people – on the other hand, comments insist, government must regulate the tools of these spies!

    It’s really sad to see the Lefties crow over the Wall Street collapse as some sort of vindication of their fear of people making their own decisions. As if there had been anything like a free market in financial services. As if the story weren’t from one end to the other a story of companies competing for government-provided advantage over each other and over their customers by seeking favorable government action, concessions and franchises and specific advantageous regulation. As if government regulation hadn’t started the problem in the first place, kept it from becoming well understood early on, and prevented it from being corrected by market forces until it became a crisis. And then BLOCKED the natural corrective action by throwing tax money at the people who should have suffered the consequences, ensuring that the fundamental problems will not get fixed until the Wise Mandarins can entrench some even greater bureaucracy of “oversight” to make sure there are plenty of opportunities for bribes to go to the next correct group of politicians, and no fat cats lose any hard-earned bonuses and parachutes.

    Keep it up, Lefties. It’s time for the pendulum to swing back your way. If you loved the Jimmy Carter 70s, you’ll love the Barack Obama teens.

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  10. @calp

    Oh Dear you don’t seem to realize that this is an attempt by Media Mogul Interests to exert Power over the Entire Populous; it is in fact nothing to do with whether you are Right Wing or Left Wing it is about the Freedom of each Individual & how much control they actually have over their own destinies.

    That is why such Laws are set up to Protect the Individuals irrespective of their Political Beliefs!

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