Report Spurs PVR Policy Changes
By Betsy Harter
from the April 16, 2001 issue of Broadband Week
Personal video recording software developers are being forced to rethink the way they communicate with customers because of the brouhaha surrounding the Privacy Foundation's recent report criticizing TiVo for misleading consumers about its privacy procedures.
The report, "TiVo's Data Collection and Privacy Practices," stated that TiVo's digital video recording device and service gather enough information to track individual users' home viewing habits, while apparently promising not to do so. The report warned TiVo about potential legal problems due to conflicts between stated privacy policies and its actual practices.
In the wake of the report, analysts say it is important for TiVo and other PVR device and software companies to make their privacy procedures well known to consumers, in order to quell concerns that could slow the fledgling PVR market.
"They certainly need to tell people in more detail about how they are collecting information and what they are doing with it," says Mike Paxton, a senior analyst converging markets and technologies for Cahners In-Stat Group. In-Stat is owned by the same parent as Broadband Week.
Investigations Pending
Other PVR companies can expect similar investigations by the Privacy Foundation. Richard Smith, Privacy Foundation chief technology officer and one of the report's authors, says the organization will likely look at any box that connects to the Internet. "Clearly there is a similar issue with ReplayTV," Smith says. "If you read its privacy statement, it says a lot of the same stuff (as TiVo's). We are still looking at (Microsoft's) UltimateTV. We bought an UltimateTV box, but we don't know what the terms of the service agreement are yet."
PVR software manufacturers ReplayTV, Metabyte Networks and Microsoft are unconcerned about investigations. Manu Mehta, Metabyte Networks CEO, points out that the company's MbTV uses client-based, or home-based, personalization. The technology is embedded in the set-top box, and a profile of a consumer's TV watching behavior stays in the box.
Mark Mullen, Microsoft senior director for UltimateTV, says the company collects data, which it uses in aggregate form to understand how customers use the boxes and the features. It also collects operational data to monitor performance. It does not combine this information to personally identifiable information.
"We are explicit in our privacy statement as users go through registration," he says. "It is not possible for us to collect data until you register. There is a clear opt-out in there as well."
Passing the Buck
Steve Shannon, ReplayTV vice president of marketing, says ReplayTV gathers some information from viewers, but it never associates that information with personal information, such as a customer's name and address, unless the user specifically asks the company to do so. Replay publishes its privacy policy on its site, and in its most recent user manuals.
Shannon adds that because ReplayTV has become a software licensing company as opposed to developing retail products (it recently was acquired by consumer electronics manufacturer SonicBlue); the privacy issue is in the hands of hardware manufacturers such as its partners Panasonic and Motorola.
"We encourage them to take the high road of course, but for future deployments of our technology it will really be up to them, as well as the service providers, as to how they want to use the technology," he says.
UltimateTV's Mullen disagrees, pointing out that the majority of the responsibility falls to the software provider. "UltimateTV bears a lot of responsibility for privacy because it is the new heart of this equation, which is making data collection possible," he says.
Similarly, In-Stat's Paxton does not expect cable and satellite operators to take responsibility for privacy, since the information and data is not going to the service providers.
"I am sure the operators are keeping an eye on privacy, but they are not real concerned about it because the TiVos of the world--not the Time Warners or AT&Ts--are doing the data collection, storage and analysis," he says.
Sharing viewer information with hardware manufacturers concerns the Privacy Foundation.
"If you read carefully the entire TiVo privacy promise, it reserves the right to pass along viewing information to either Sony or Philips," Smith says. "How clear that is made when customers opt in is an issue, and then the question is, what will Sony and Philips do with that information?"
TiVo in particular is getting flak for not being candid enough, primarily about the information it collects. TiVo devices require subscription to a service--connected to the device via dial-up phone line--that enables the user to perform personal video functions such as recording and time-shifting of programs, or searching for preferred types of programming.
Although industry insiders tend to be aware that TiVo collects anonymous viewing information, the general public is unaware, In-Stat's Paxton adds.
Laurence Bloom, TechTrends director of research and consulting, agrees that companies must educate consumers better about their data-gathering practices. "TiVo and other companies offering personalized or any two-way interactive TV service need to continue offering live demonstrations to consumers in order to show not just the features of the product and service, but also how and what type of information is collected, stored and used by their service," he says.
Following the March 26 report, TiVo immediately responded with public restatements of its privacy policy and stressed that it never has collected personal information about its viewers without their express consent. The company also provides a link to a more detailed privacy policy and a Q&A section explaining in laymen's terms the difference between personal viewing data and anonymous viewing data.
Matthew Zinn, TiVo's chief privacy officer, says TiVo has not communicated directly with customers regarding the Privacy Foundation's report, but it regularly communicates any changes in its policy that affect consumers. "With respect to the Privacy Foundation's report, we posted our response on our Web site in concurrence with the report and we have responded to all customer inquiries on the matter promptly," he says.
The report advises TiVo to resolve discrepancies between its stated policies and its actual practices; cease collecting diagnostic logs and viewing information from subscribers until it solves the problem; ask for permission to collect viewing information; and allow users to change privacy preferences.
Smith expects TiVo to face government pressure to adopt the Privacy Foundation's recommendations. After the report was released, Democrat representatives John Dingell, Edolphus Towns and Edward Markey sent a letter to FTC Chairman Robert Pitofsky asking for an investigation.
Zinn says TiVo will consider implementing the Privacy Foundation's recommendations. "We are always interested in improving the ways we can communicate or articulate information to our subscribers," he adds.
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