AT&T wants $139 a month, or your privacy, for superfast Internet

President of AT&T California Ken McNeely speaks about the company's new high-speed internet at the Cupertino Community Hall on Monday, March 30, 2015 in Cupertino, Calif. U-Verse with AT&T GigaPower launched in Cupertino. less President of AT&T California Ken McNeely speaks about the company's new high-speed internet at the Cupertino Community Hall on Monday, March 30, 2015 in Cupertino, Calif. U-Verse with AT&T GigaPower launched in ... more Photo: James Tensuan, Special To The Chronicle Photo: James Tensuan, Special To The Chronicle Image 1 of / 8 Caption Close AT&T wants $139 a month, or your privacy, for superfast Internet 1 / 8 Back to Gallery

AT&T believes Bay Area customers are ready to pay for faster Internet service — whether it’s with their wallet or their privacy.

On Monday, Cupertino became the first West Coast city to offer AT&T’s GigaPower, which promises Internet speeds so fast customers can download 25 songs in less than a second.

But that speed comes at a price: $139 a month, or $110 for those who allow AT&T to monitor their browsing habits.

With its Internet Preferences program, AT&T hopes to turn customer data into extra revenue. The company plans to compile the information about online activity — what users are Googling, which sites they favor, and what products they click on — to sell higher-priced personalized advertisements.

The pricing strategy is an interesting new twist on advertising that pits AT&T against free Internet services like Google and Facebook, which also serve customized ads based on users online activities.

But AT&T’s model has alarmed privacy-rights advocates because the Internet Preferences program monitors all online activity — not just activity on a search engine or social network.

“The idea that your Internet service provider is going to be spying on the contents of your traffic, even in an automated way, is very disconcerting,” said Jeremy Gillula, staff technologist with the San Francisco digital-rights organization Electronic Frontier Foundation.

“What if data about your browsing history gets out?” he said. “What if there’s a data breach?”

GigaPower relies on fiber-optic cables, thin strands of glass that carry data at faster speeds than older copper-wire networks. AT&T is adding this higher level of service to its selection of U-verse Internet, TV and voice services (all three cost $180 a month for those willing to part with their data, and $209 a month for those gun-shy about their browser history).

AT&T hopes to court customers who have a need for speed such as online gamers and those who use video-chat services such as Skype.

AT&T is also racing against fiber-optic competitors such as Google to roll out GigaPower, which is now in six markets in Texas, Missouri and North Carolina, with plans to expand to 10 other markets in the coming months.

The company last week touted that it has invested more than $2.2 billion in the last three years on its network in just the Bay Area.

At a news conference, Cupertino Mayor Rod Sinks said he is proud his city became the first community west of Kansas City to have GigaPower, putting it on par with other high-speed cities like Seoul and Stockholm.

“If you think about remote learning, if you think about tele-medicine, if you think about entertainment, a faster Internet is essential to being competitive in the future,” Sinks said.

Cupertino streamlined its permit process to hasten installation of GigaPower equipment. AT&T installed equipment that could reach thousands of homes in the city, but only began taking orders for the service Monday morning and had yet to sign up any local customers. AT&T executives would not say which area cities are next in line.

With GigaPower, AT&T can monitor traffic to determine what type of specific ads to serve individual customers, and then charge advertisers to reach those customers.

For example, if a customer browses a car dealership site, AT&T would know to pop an auto manufacturer’s ad onto their screens — an arrangement that could prove lucrative for AT&T.

Terry Stenzel, AT&T’s Northern California vice president and general manager, said the company can use those ads to help keep down the price of its service. He also said that all browsing data are kept in-house and that AT&T will not sell customers’ information, including credit card information, to any third-party company.

“I love the fact that if I’m going to go online and use different sites that AT&T knows what I’m doing and can save me money by sending me coupons and making recommendations based on what I have done in the past,” he said.

Dan Marcec, spokesman for online advertising research firm eMarketer, said customers might not have a problem trading their privacy for discounts and coupons.

People “generally don’t have issues with advertising that they feel like they’ve raised their hands to receive,” he said.

But “$29 a month to opt out of advertising is a big ask, especially if this product is already priced at a premium,” he said.

And only the heaviest Internet users are likely to notice the speed boost enough to switch, he said.

The move to monetize privacy comes after Internet service providers such as AT&T lost their fight for the ability to charge Internet users or sites for access to an online fast lane — challenging a principle known as net neutrality. Charging for privacy could be a new frontier for Internet service providers.

Gillula said the Internet Preferences program does not appear to violate the Federal Commmunications Commission’s net neutrality rules because customers must agree to opt in to the program. “And if a customer agrees to it, they (AT&T) can pretty much do anything they want,” he said.

But he warned potential GigaPower customers to read all of the fine print to become “aware of what they’re giving up.”

“It really is trade your privacy or pay more,” he said.

Benny Evangelista is a San Francisco Chronicle staff writer. E-mail: bevangelista@sfchronicle.com Twitter: @ChronicleBenny