U.S. carrier Verizon has launched a new rewards program as it pushes for more lucrative ways to eke money out of a subscriber base that's not growing as easily as it once was. (Disclosure: Verizon is the parent company of TechCrunch's parent, Oath (formerly AOL; Oath being formed from the merging of AOL and Yahoo)
As the WSJ notes, the more than 600,000 subscribers the company added in the last quarter had to be wooed with cut prices and revived unlimited data offerings -- so that type of growth is more costly to its bottom line. While revenue generated by the company's core wireless business in 2016 was 2.7 per cent down on the year before.
Verizon is therefore intent on transforming into an "information company" which sells "experiences" on top of connectivity, and looks for ways to "optimize the monetization" -- including making use of machine learning and AI, as the company's EVP and president, Ronan Dunne, put it in comments at a conference last month. (For "optimize the monetization" read: target ads to our existing subscriber-base to ramp up our share of the digital advertising market.)
In a promo video for Verizon Up, as the new program is called, the wireless giant claims its motivation for giving customers who sign up for the program one credit (which is good for one reward) for every $300 they spend on their monthly bill -- which they can redeem on a variety of offers from Starbucks coffee to TV shows to movie premiers to concert tickets -- is "just because you're with Verizon". "Because, thanks," they add.
Of course the truth is rather less one-sided.
A legal disclaimer on the Verizon Up sign up page notes that only those customers who sign up for Verizon Select are eligible for the rewards program. So what is Verizon Selects? It's Verizon's ad-targeting program, which targets marketing based on users' personal data.
So, in plain English, Verizon is saying: let us use your browsing, location, interests and other personal data for marketing purposes -- and we'll let you participate in our earn-rewards program.
Verizon Selects targets ads based on users' web browsing, app usage, device location, use of Verizon services and "other other information about you (such as your postal/email addresses, demographics, and interests)" -- sharing this information with Oath (aka the digital media entity formed after the recent merging of Verizon acquisitions, AOL and Yahoo) in order to power wider ad-targeting of Verizon users across its devices and services.
The data is also being used to personalize the rewards individual users see in Verizon Up, the company's FAQ says.
The wider context here is that Oath is Verizon's bid to better compete for digital ad spend with the personal-data-harvesting ad-targeting specialists of the Internet: aka Google and Facebook.
Regulation of how telcos can use personal data has typically been tighter than for Internet services but earlier this year the FCC reversed tighter privacy rules for broadband providers -- thereby giving giants like Verizon more room for their data-harvesting, ad-tracking manoeuvres.
Interestingly, Verizon is not auto-enrolling all users in the rewards/data-sharing program -- so is evidently taking things a little more cautiously than it could technically, given the current lack of a robust regulatory framework covering U.S. ISP privacy.
As TechCrunch wrote in March, when the broadband privacy rules were reversed --
- ISPs can record and sell your browsing history, data on which apps and services you use and so on.
-- with only the potential possibility of the FTC regaining privacy oversight of ISPs in future to provide some pause for thought in how wireless providers go about sucking up and sharing their customers' data.
Writing in the Hill in March, at the time of the broadband privacy rule reversal, FTC commissioner Terrell McSweeny warned of what she couched as "part of a larger effort to substantially shift the risks of data security from companies to consumers and to weaken consumer privacy choices".
Even so, ISPs face the risk of losing customers' trust if they are perceived to be playing fast and loose with their privacy -- so perhaps a sense of needing to balance these sorts of trust issues is feeding into Verizon's decision to make the program opt-in, as well as wider regulatory considerations.
On the latter, earlier this year Verizon agreed to paid a $1.35M fine to the FCC which had been investigating its user of so-called "supercookies" to target ads -- and also agreed it would ask users to opt-in before sharing data with third parties. So that penalty is serving as a recent 'regulatory considerations' reminder.
Commenting about the new Verizon Up program to the WSJ, Diego Scotti, Verizon’s chief marketing officer, pointed to tech giants like Google and Facebook, saying: "Some of our competitors, they have exactly the same thing, it’s just buried in the terms and conditions of the service. We are not hiding anything.”
Although there's still at least a technical difference between an Internet application that people choose to use, like Facebook, and an ISP that provides Internet connectivity, with only limited alternatives for accessing the Internet if someone wants to ditch their ISP (even if lots of web users might feel they cannot easily ditch Facebook or Google, either).
Verizon users opting to share their personal data with Oath for ad-targeting purposes can withdraw their consent (via logging in to a preferences page) -- however an FAQ on the program suggests that users' data is unlikely to be immediately deleted. "Information used for Verizon Selects while you are a participant may be kept for up to three years," it states.
"Information previously collected may continue to be used for analytics and modeling purposes," the FAQ further notes.
We've reached out to Verizon with questions and will update this post with any response.