Privacy advocates slammed AT&T Inc. on Thursday for declaring that it owned its Internet and video customers' account information and could hand the data over to law enforcement if needed.

AT&T on Wednesday updated its privacy policy, which came as the company and other phone operators faced lawsuits claiming they aided a U.S. government domestic spying program by inappropriately handing over millions of call records.

"My understanding is that they will be monitoring television viewing habits, and that it's a condition of service that customers can't opt out of," said Paul Stephens, policy analyst at Privacy Rights Clearinghouse.

"It's frightening," he said.

In the policy update, which applied to AT&T's more than 7 million Internet and video customers, the company said it could collect usage information from subscribers, including the Web pages they view, the programs they record, and the games they play.

Customers must agree to the terms, which take effect on Friday, before using AT&T's services. AT&T's previous policy guidelines did not explicitly say the company owned customer data.

In its broader privacy guidelines, which apply to all retail customers including phone clients, AT&T said it had an obligation to help law enforcement and would act "strictly within the law and under the most stringent conditions."

AT&T SHARES HOLD STEADY

Although the news riled privacy advocates, it did not have a big impact on the company's shares. AT&T was down 0.4 percent at $27.23 in afternoon trade, similar to a 0.3 percent fall in Verizon Communications Inc..

AT&T, Verizon, BellSouth Corp. and Comcast Corp. have been named by media reports as having shared customer information with the National Security Agency.

Some of the companies are also facing class action lawsuits and are under scrutiny by privacy advocates.

AT&T said it began to review its privacy policy six months ago, and the update was aimed at clarifying its practice and did not change how it treats customer information.

But the American Civil Liberties Union said AT&T was trying to give itself license to do what it wants with client data.

"By secretly providing customer data to the government outside of any legal channel, AT&T has violated the privacy expectations of Americans - not just the terms of some legalistic privacy policy, but their basic expectations for how private communications will be treated in America," said Barry Steinhardt, director of the ACLU's Technology and Liberty Project, in a statement.

Sherwin Siy, staff counsel at the Electronic Privacy Information Center, said AT&T had likely clarified its policy to protect itself against further accusations.

"It's not protection for consumers but more a waiver of their rights," he said.

AT&T was the first major phone company to explicitly state that it owned customer records since the privacy issue was first raised in a report by the USA Today in May.

Verizon said it updated its privacy policy in November 2005 and had no imminent plans for change. The company said it must disclose information to comply with court orders or subpoenas, and to protect its rights or property.

Comcast said it reviews its policy on an annual basis.

"We do not sell customer information to third parties, and we do not provide customer information in response to legal and law enforcement requests without valid legal process, such as a subpoena or court order," said Comcast spokeswoman Vibha Agrawal.

Copyright © 2006 Reuters Limited

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