The inspiration for this post came from controversial news that Charter Communications is launching an “enhanced online experience” in four test markets that will see it use deep-packet inspection technology to monitor the searches and Web site activity of its six million users so it can serve them targeted advertising.

Charter’s decision raises some serious concerns (e.g. privacy) but some intriguing possibilities, specifically the “value” of being able to delivered targeted advertising to a captive audience. While the privacy issues are important and should not be underplayed, let’s focus on the advertising opportunity.

In Charter’s case, it’s forcing targeted advertising down the throats of its customers, although there’s an opt-out system that is far from customer-friendly. In offering an “enhanced online experience” (does that strike you as 1984-ish or what?), Charter benefits by being able to charge advertisers (through a third-party) a premium to access the surfing habits of its customers. The more information that Charter pulls in, the more revenue it can generate from advertisers.

Aside from seeing advertising that is perhaps more relevant or interesting, there’s little in this new arrangement for Charter’s subscribers.

But if an ISP came up with a more fair equation.

For example, what if an ISP offered free broadband services in exchange for access to all your online activity so they knew exactly what you were doing online at all times? It would be very Big Brother-like but would that be worth saving $50 to $70 a month?

Would you take free broadband if it meant locking your into a bundle that also included telephone and cable services for three to five years?

Would you take free broadband if it meant you were limited to 5Mbps service and had your access throttled back during peak times so paying customers could surf on the superhighway while you meandered along on the country road?

Is there a price that you would pay for free broadband service?

For more on Charter’s decision, check out Wired’s Threat Level blog as well as Techdirt.

Charter Communications is sending letters to its customers informing them of an “enhanced online experience” that involves Charter monitoring its users’ searches and the websites they visit, and inserting targeted third-party ads based on their web activity. Charter, which serves nearly six million customers, is requiring users who want to keep their activity private to submit their personal information to Charter via an unencrypted form and download a privacy cookie that must be downloaded again each time a user clears his web cache or uses a different browser.

Technorati Tags: Broadband, Privacy