NebuAD CEO Bob Dykes (who I interviewed last February) appeared before Congress yesterday to defend his company's behavioral advertising technology, which tracks user browsing habits in order to deliver tailored ads. Forbes claims Dykes was "grilled" (usually code for softball questions with little to no follow up) by Congress, which seems split between those who believe the online ad industry should "self regulate" (like the FTC) and those who'd like to see some kind of rules put into place to protect user privacy.

With the NebuAD model, ISPs are paid (at least $2.50 per month per user) to host deep packet inspection hardware on their network that tracks your browsing activity, delivering it to NebuAD -- who in turn delivers tailored ads to the userbase. While NebuAD insists the system keeps your data anonymous, their cookie-based opt-out system has never worked properly, opting users out of tailored ad delivery, but not out of being tracked.

That could run afoul of several wiretap and privacy laws, something that caught the eye of Congress when Charter announced their plans to use the system last May. A number of ISPs (Charter, Embarq, CenturyTel, Knology) have since suspended their plans to use the technology out of fear of legal liability. It's now up to Congress to decide if they're going to do absolutely nothing to protect consumer privacy (the most likely), or stand up to the $11 billion online ad industry and demand such systems be opt-in (extremely unlikely).