Investors hit internet providers over privacy concerns

A coalition of US investors has filed resolutions with ten publicly held internet service providers (ISPs) urging them to report on how their policies affect privacy and freedom of speech.

The annual meeting resolutions, from members of the Open Media and Information Companies (Open MIC) Internet Project investor coalition, have been submitted to AT&T, Charter Communications, CenturyTel, Comcast, Earthlink, Embarq, Knology, Sprint Nextel, Qwest Communications and Verizon Communications.

New York City pension fund comptroller William Thompson Jr, whose fund has put up six of the resolutions at companies in which it holds 10.5 billion shares, said internet network management and its potential effect on users ‘has become a significant public policy concern.’

The resolutions call for public reporting on how each company deals with privacy and freedom of speech issues. They warn that ‘failure to fully and publicly address this issue poses potential competitive, legal and reputational harm’ to companies, and that this could therefore negatively affect the value of companies for investors.

Recent controversies to have internet ISPs include scrutiny by the US Congress of their use of so-called ‘deep packet inspection’ technology, which can provide individual personal data based on a user’s internet traffic. The Federal Communications Commission also punished Comcast last summer for its surreptitious interference with subscribers’ use of peer-to-peer software applications.

Farnum Brown of Trillium Asset Management, another of the 50 investors, said he was concerned that companies in the sector ‘have responded to the challenges of managing the internet in a patchwork, ad hoc fashion’ and in so doing ‘have failed to notice the profound social policy issues they’ve unwittingly engaged in’.

Brown added: ‘Americans are concerned about how their use of the internet is monitored, and they’re concerned about whether their privacy and freedom of expression are respected by the companies that manage the internet. As shareholders we believe it’s in these companies’ best business interests to respond to those concerns.’

Around 211 million Americans – 70 per cent of the population – use the internet daily.