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AT&T’s gigabit service is $70 if you let it spy on your searches

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AT&T said Wednesday that it has started service in four Austin neighborhoods with an offer to bring its GigaPower fiber-to-the-home service for $70 a month — but with a pretty big catch.

If you want to pay the lower rate you must agree “to participate in AT&T Internet Preferences.” This means, “AT&T may use your Web browsing information, like the search terms you enter and the Web pages you visit, to provide you relevant offers and ads tailored to your interests.”

Looks like AT&T isn’t just trying to compete with Google’s(s goog) fiber build-out in Austin, but also its targeted advertising business model. This is also a similar model to what Amazon(s amzn) is doing with its lower priced Kindle tablets that cost less if you elect to let the tablet show you ads. Here are the two options for the service:

Premier: Internet speeds up to 300 Mbps for $70 per month, which includes a waiver of equipment, installation and activation fees. This also means you’ll agree to sign up for AT&T’s Internet Preferences program (a fact noted in a footnote in the release). Customers who also select U-verse TV will receive free HBO, HBO GO for 36 months, and HD service for $120 per month with qualifying TV services.

Standard: Internet speeds up to 300 mbps for $99 per month. AT&T will upgrade those customers later at no extra charge. Later, those customers can get a gigabit at no extra cost, and presumably while retaining their right to privacy. You can add television for $50 more per month.

I’ve asked AT&T for some more information on this model, which is reminiscent of the efforts of ISPs to use deep packet inspection to deliver advertising to users. There’s was a significant outcry about that at the time.

Back in 2008 companies like Phorm and NebuAd used technology called deep packet inspection to scan packets as they passed over the network. The idea is that ISPs could then offer more targeted advertising to users and take a cut of the money that they saw companies like Google or Yahoo snagging from the internet. Several ISPs actually used DPI gear without telling users and the result was a Congressional hearing and a retrenchment by the ISPs.

I asked AT&T how it plans to implement this program, if it was using DPI or if it planned to have users visit a certain search page in order to capture the results (a model closer to Google’s). Here’s the response:

We use various methods to collect web browsing information, and we are currently reviewing the methods we may use for the Internet Preferences program. Whichever method is used, we will not collect information from secure (https) or otherwise encrypted sites, such as online banking or when a credit card is used to buy something online on a secure site. And we won’t sell your personal information to anyone, for any reason.

The good news is AT&T doesn’t plan to overlay ads on top of a site’s existing ads, and possibly hacking off site owners. It will instead use its targeting abilities to deliver better ads. As a commenter notes below, this means AT&T might work with ad networks and publishers.

The gigabit service will have a one terabyte data cap with overage fees of $10 for each additional 50GB, up to an additional $30 per month. The pricing with targeted advertising is in line with what Google charges in Kansas City, although Google does offer a free 5 Mbps service, and has confirmed that it does not inspect your content at the packet level as an ISP.

If you are curious about how AT&T will build out its network, check out this story I wrote yesterday with that information. Meanwhile, because this is such a hot-button topic I’ve pasted a note from AT&T about the program in its entirety. Here you go:

A bit more about AT&T Internet Preferences:

We’ll use your individual web browsing information, like the search terms you enter and the web pages you visit, to tailor ads and offers to your interests. You won’t necessarily receive more ads when you are online, but those you do see may be more suited to your interests.

For example: If you search for concert tickets, you may receive offers and ads related to restaurants near the concert venue.

We won’t sell your personal information. Rather, AT&T may use your personal information to direct another advertiser’s ad to you, but that advertiser would never have access to your Personal Information. For example, after you browse hotels in Miami, you may be offered discounts for rental cars, but that rental company doesn’t know who you are.

With AT&T Internet Preferences, we are trying something different. Consumers are used to the concept of a mobile app or an e-reader being priced differently with or without certain ads, or a free email service that stays free by serving ads. We want to give Austinites a similar choice with our latest innovation, U-verse with GigaPower.

27 Responses to “AT&T’s gigabit service is $70 if you let it spy on your searches”

  1. What do the devices look like that terminate the 300mbps going to 1gbps in the future? I would want a small box with wired connections like rj45, a wireless hub (e.g. 802.11ac) and maybe even coax connectors so I could get IPTV at some point? Or are they big gray industrial outdoors capable like boxes? What does fiber to the home look like inside the home?

  2. elfonblog

    “Internet speeds up to 300 mbps for $99 per month. AT&T will upgrade those customers later at no extra charge. Later, those customers can get a gigabit at no extra cost…”

    It pains me how vague this phrase is. Does it mean that ATT will sell 1000Mbps service for $99 also, or does it mean they will not charge a service fee to perform the upgrade, but will charge more for the service tier above 300Mbps? Thank You.

      • elfonblog

        To a utility, “upgrading” service, and “having” service are two separate billable events. ATT’s statements always refer to the *upgrade* being at no charge. It’s this ambiguity that I’m trying to untangle. As phrased, it leaves the door wide open to ATT still charging a higher rate for the upgraded service, while waiving their industry-standard service charge to make changes to one’s service. This is not yet clarified. As it stands, I could not confidently tell someone that ATT has clearly said that 1Gbps service will also cost $99/mo.

        Is this a touchy question for ATT? Can we not get firm clarification that 1Gbps service will be billed at the same monthly rate as the initial 300Mbps service?

  3. James Katt

    Here is how you can save money and still have privacy:

    1. Get AT&T’s gigabit service for $70 a month

    2. Occasionally surf on it – to give AT&T its due.

    3. The rest of the time, connect to a VPN so you can surf anonymously without AT&T being able to monitor what you do.

  4. Billy Brewer

    The “free” Google service mentioned is not actually free. The customer pays a $300 fee upfront to Google for installation of this free low bandwidth connection.

  5. Anonymous

    Very interesting. The where to get the inventory question doesn’t seem a difficult one. Of course, they’re not going to inject ads. They can buy as much inventory as they need off exchanges. Ads go in existing units and publishers get paid. This is what the you won’t receive more ads text from ATT means. Essentially ATT helps advertisers pick better impressions to buy and ATT gets paid for this.