(Updates background, details of proposal)
By David Shepardson
WASHINGTON, March 15 Ratings agency Moody's
Investors Services said on Tuesday that a proposal by U.S.
communications regulators to impose privacy restrictions on
broadband providers like Verizon Communications Inc, AT&T
Inc, Comcast Corp and Charter Communications Inc
U.S. Federal Communications Commission Chairman Tom Wheeler
on Thursday proposed barring providers from collecting user data
without getting consent as part of a privacy proposal for
Moody's said Internet providers could be "severely
handicapped" in their ability to compete with digital
advertisers such as Facebook Inc and Google.
Under the FCC proposal, Google, Facebook, Twitter Inc
and other websites could keep collecting data from
users without their consent, Moody's said.
"We believe this to be a long-term risk to the current
TV advertising business model, as well as all broadband
providers whom also have ad sales exposure," Moody's said.
Digital advertisers like Google and Facebook are regulated
by the Federal Trade Commission, under a less stringent standard
than the FCC's proposed rule.
Unless the two agencies align their privacy laws, Moody's
said, online digital advertisers will have "a distinct
competitive advantage" as more advertising dollars will continue
to flow to them.
AT&T said last week that it was unfair that the FCC is
holding broadband providers to a different standard than
companies such as Apple Inc and Google.
Wheeler's plan would require broadband providers to obtain
consumer consent, disclose data collection, protect personal
information and report breaches. These companies currently
collect consumer data without consent, and some use it for
targeted advertising, which has drawn criticism from privacy
The FCC has authority to set privacy rules after it
reclassified broadband providers last year as part of new "net
neutrality" regulations. A federal appeals court has not ruled
on a court challenge to that decision.
The FCC will vote on Wheeler's proposal at its March 31
meeting. A final vote on new regulations would follow a public
Last week, Verizon agreed to pay $1.35 million to settle an
FCC privacy probe after it admitted it inserted unique tracking
codes in its users' Internet traffic for advertising known as
"supercookies" without getting their consent or allowing them to
(Reporting by David Shepardson; Editing by Chizu Nomiyama and
Lisa Von Ahn)