THE BUSINESS OF PRIVACY

In this age of e-commerce, personal data is treated the same way an international banker treats currency: Information about consumers can be passed from business to business the same way cash is transferred from one account to another.

Many Internet start-ups have failed because consumers were reluctant — even frightened — to give credit card numbers at the point of purchase. Some Internet sites are still losing 60% to 70% of potential customers to concerns about privacy.

To date, no single entity in the rapidly morphing telecommunications industry has emerged as the market leader in privacy. For now, the phone giants, wireless firms and cable companies seem content to bundle their products and services in a way that makes consumers feel they are getting added value, quality and speed for one low price. These companies are missing a tremendous opportunity to expand their consumer base through responsible data management.

Under our existing regulatory structure, each carrier of data — be it broadband, cable, wireless or basic telephone service — has a completely different set of rules governing the transfer and the use of personal information. For example, the Cable Communications Policy Act of 1984 contains one of the strongest privacy laws written to date. But it governs the cable industry and does not impact DSL or wireless transmission of personal data.

No telecom entities have asserted leadership on the issue of privacy by expressly guaranteeing consumers that their data will not be used or manipulated without their consent. Any one of these companies could take steps to manage data in a way that would build confidence with customers and increase market share. Any of them could gain a competitive market advantage by designing and enforcing tough privacy policies and by informing their customers of efforts to guarantee the protection of personal information.

Notice, consent, choice and access are basic bars that the telecom industry must clear to show consumers they are taking privacy seriously. Consumers should be notified about how data will be used. They should be able to say no. They should have some say regarding the way personal data is stored or transmitted. And they should have access to their data to fix problems or mistakes that might have been introduced.

Companies that don't observe these basic privacy ground rules run the risk of losing consumer confidence. They also risk losing market share to companies that do take their privacy polices seriously. Telecom firms should adopt the philosophy that good privacy is good business.