Now ISPs Want to Serve You Ads, Too

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A French outfit called Qosmos, which is expanding into the U.S. this year, says its data could be used to extrapolate a user's demographic profile: Extensive use of the Facebook social network and instant messaging applications could point to a younger person, for example, says Qosmos CEO Thibaut Bechetoille. Someone who frequently shops for women's shoes and reads Cosmopolitan online is likely to be a young woman. "I think it'll be an alternative source of data [to Google]," he says.

Congress Investigates Privacy Issue

Carriers' ability to make money off this technology will depend largely on what user data they'll be allowed to view. "If they get something as comprehensive as the view of the majority of traffic, they'd enjoy a substantial advantage," says Andrew Frank, research vice-president at consultancy Gartner (IT). But that's unlikely because of privacy concerns.

After a recent inquiry, the Federal Trade Commission decided against regulation of DPI technology. Congress may not be so forgiving. "I believe broadband providers deploying DPI technologies must adopt clear privacy policies," said Representative Edward Markey (D-Mass.), chairman of the House subcommittee on telecommunications & the Internet, at a July 17 hearing. The lawmaker sent a letter to Embarq seeking further information on the company's use of DPI technology. "We have received the letter…and are reviewing it for an appropriate response," Embarq said in an e-mailed statement.

Markey called for carriers to use the technique only with customers who opt into the advertising program—a requirement that, if imposed, could cripple such programs' scope. Charter Communications (CHTR) had been planning its own trial of NebuAd's technology, but put it on hold in light of the concerns raised by lawmakers. Charter declined to elaborate on its scrapped trial. Consumers, meantime, can rest assured they won't be getting ISP-delivered ads, at least not anytime soon.

Kharif is a senior writer for BusinessWeek.com in Portland, Ore.