One example of the current discussion regarding ISP efforts to participate in revenue streams based on advertising is this overview article that appeared in MediaPost. Charter and others are looking into ad insertion based on capturing information about the web browsing behavior of their customers.
In the U.S., ad company Charter Communications has said it intends to share information about its broadband subscribers' Web surfing with ad company NebuAd. Bob Dykes, CEO of NebuAd, has said that the platform is anonymous, and that users will be able to opt-out.
The Center for Democracy and Technology among other advocacy groups is rightly concerned about privacy issues. Their recent comment [PDF] on the Network Advertising Initiative includes the following:
CDT believes the NAI guidelines should expressly address advertising networks’ use of Internet traffic content from Internet Service Providers (ISPs) for behavioral advertising. Behavioral advertising networks that access and inspect the content of consumer traffic at the ISP level have gained significant attention in recent months.3 In this new model, an advertising network strikes a deal with an ISP that allows the network to receive the contents of the individual Web traffic streams of each of the ISP’s customers. The advertising network analyzes the content of the traffic in order to create a record of the individual’s online behaviors and interests. As customers of the ISP surf the Web and visit sites where the advertising network has purchased advertising space, they see ads targeted based on their previous Internet behavior. While the model that has been described so far involves an ISP contracting with a third party to operate such a behavioral advertising network, it would also be possible for ISPs to do the traffic content inspection, categorization, and ad delivery themselves.