The U.S. Senate Committee on Commerce, Science, and Transportation has scheduled a hearing on how well the online industry is self-regulating consumer privacy concerns. The committee’s chairman, Senator John Rockefeller, said the following:

“In our prior hearing on consumer privacy, both the Obama Administration and the FTC commended recent industry efforts to provide consumers with more privacy protections,” said Chairman Rockefeller. “However, their reports also stated that industry can do more and that federal legislation is necessary. In this follow-up hearing, I intend to closely examine how industry intends to fulfill its recent pledge to not collect consumers’ personal information when they utilize the self-regulatory ad icon or make “do-not-track” requests in their web browsers.”

The hearing is scheduled for 28 June 2012.

Federal Trade Commission Chairman Jon Leibowitz yesterday signaled the FTC’s preferences for future online privacy policies before the House Sub-Committee on Commerce, Manufacturing, and Trade. Chairman Leibowitz would like to see a best practices for protecting consumer online privacy; an acceleration of self-regulation within the online industry; a consumer privacy bill of rights which is heavily endorsed by the Obama Administration, and further developments in a do not track mechanism that would protect consumers visiting certain websites.

Chairman Leibowitz also recommended that Congress enact general privacy legislation. The legislation should require that companies implement reasonable measures and notify consumers of certain security breaches while providing consumers access to information maintained on them by information data brokers.

I can understand consumer concerns about the leakage of certain pieces of information, i.e., financial and medical information. Unfortunately sensitive information can be used against consumers during job searches or legal proceedings. Consumers should have this assurance especially if we want to promote broadband adoption among 100 million households over the next decade.

Investors and businesses should not be too overly concerned that the best practices proposed by the FTC are overly intrusive. The FTC appears to be saying before the consumer goes past Checkpoint Charlie, agree on the information that he is going to share and assure him of how it is being used and who else may be seeing it. Once he passes Checkpoint Charlie, however, the flow of commerce should be left uninterrupted. Delays in information flow will only drive up business costs by creating a false scarcity of information and added uncertainty in decision making.

According to The Wall Street Journal, Facebook may be entering into a settlement agreement with the Federal Trade Commission regarding when Facebook subscribers are notified about the changes in the use of their personal information. Facebook will allegedly submit its privacy practices to an outside audit for 20 years.

Mr. Zuckerberg would, according to the article, like to make it easier for subscribers to control how much of their personal data is released to the public.

If I were investing in Facebook, LinkedIn, or Twitter, and read Mr. Zuckerberg’s last statement about making user control over privacy easier, I’d dump the stock. It’s like a cattle rancher telling his herd, I’ll make it easier for you to escape.

The information that Facebook collects is the raw resource that it converts into ad and other sales. The more information that he can package for sale to advertisers and other data aggregators, the better it is for Facebook and other social media firms. Better meaning greater profit.

By failing to get in front of regulators, all he has done is driven up the cost of acquiring his most important factor input: personal information. A good cattle rancher knows how to head of the herd at the pass.

An article in The Wall Street Journal discussing the business upside of internet pornography. Cable television is seeing their, shall we say, prurient interest being eaten by free availability of pornography on adult websites. Not exactly one of the coming attractions that we think of as a tool for inciting interest in broadband.

With the exception of potential new privacy protection measures from the federal government on the horizon, consumers may feel even more comfortable visiting these sites. Not only will consumers get a rise out of this, but investor expectations and valuations of online porn entertainment ventures may get a lift as well.

The Wall Street Journal yesterday reported that French president Nicolas Sarkozy wants to get the most out of the Internet as an engine for economic growth while regulating it to protect consumer privacy and the copyrights of content producers. Meanwhile, President Obama has just landed in Ireland and I expect the president to echo Mr. Sarkozy’s sentiments.

While there is nothing wrong with disclosure statements regarding what may be done with a consumer’s personally identifiable information that is submitted to a website nor enforcing the copyrights of artists, scholars, and other content providers, neither Europe or the United States should promote regulations that reach to internal management decisions of broadband access companies.