The New York Times reports this morning on a new internet telephone service from Pudding Media, promising "free, unlimited calls to any phone in North America."  As you might expect, there's a catch, or more precisely, a detour.  You see, a funny thing happens as your digital banter bounces across the Net: every word is routed through Pudding Media's servers in Fremont, CA, where voice recognition software picks up key words, and triggers relevant advertisements to appear on your screen. 

Despite the fact that the process is completely automated and the company keeps no record of your conversation, the Times wants you to feel violated.  Words like "monitor," "listen," and "eavesdrop" give the server human qualities, and precede a not-so-subtle reference to Pudding founders Ariel and Ruben Maislos' previous work in Israeli intelligence. 

These characterizations are designed to elicit mass paranoia about yet another erosion of privacy in the digital age.  Haven't we heard this before?  When Google introduced its Gmail service in 2004, Internet privacy advocates were up in arms over targeted advertisements based on e-mail content.  The Electronic Privacy Information Center called Gmail "an unprecedented invasion into the sanctity of private communications," and argued strongly for government intervention.  In spite of this doomsaying, over 14 million users clamored for an invitation to obtain an account.  It turns out that consumers are more than willing to trade a small amount of privacy for lower cost and greater convenience.  In the case of Gmail, targeted advertisements enabled Google to offer the consumer 250 times more storage space than its closest competitor!

Adapting the Gmail business model to voice over IP will enable Pudding Media to provide the consumer with a free and versatile internet phone product.  For those who find targeted advertisements an intrusion of privacy, there is a simple and effective solution: don't use this product.  As long as the company's policies are clearly explained, educated consumers should be trusted with the freedom to make informed choices.

It is time to abandon the notion that new technologies should respect an absolute standard of privacy.  Just as consumers exhibit a variety of tastes when shopping for clothes or music, there are varying degrees of comfort in sacrificing privacy for cost and convenience.  Most Americans are willing to carry a credit card, even if this enables the card company to track their spending habits.  Some Americans, using services such as Pronto, SmartShopper, Dealio, ActiveShopper, NexTag and WhenU, even voluntarily download cyber-tracking software to monitor all of their shopping activity online and notify them when better deals arise.  When it comes to privacy, the customer is in charge: if a new technology makes too many consumers uncomfortable, it fails to be profitable, and disappears from the marketplace.

The debate over Internet privacy should not focus on free choices made by informed consumers, but rather on the ability of governments to compromise the privacy of citizens without their consent, and often without their knowledge.  Nothing illustrates this concept more clearly than what happens behind the "Great Firewall" of China.  According to an article in yesterday's San Francisco Chronicle, efforts by the Chinese government to monitor and censor the flow of information have risen to a new and somewhat surreal level.  Internet users in Beijing are now greeted by a constant reminder that the government is watching: an adorable pair of animated police officers appears on the screen every 30 minutes to ask for help in reporting "illegal information."  The government conducts this censorship under the Orwellian slogan: "constructing a harmonious society."

Unlike the decisions of individual consumers in a free market, government sets sweeping policies for the entire populace. As Congress this week debates the permanent authorization of President Bush's warrantless wiretapping program, Americans should actively engage lawmakers in a robust dialog to insist that these decisions are clear and transparent.  If we are not vigilant to debate and defend the principles of a free society, the result could be "a harmonious society."