Internet service providers are taking aim at the FCC today after the agency, in a 3-2 vote along party lines, adopted rules that require cable and phone companies to secure consumers’ permission before using or sharing data about their web use.

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FCC

Chairman Tom Wheeler called this a “significant step to safeguard consumer privacy in this time of rapid technological change, as we adopt rules that will allow consumers to choose how their Internet service provider uses and shares their personal data.”

(Separately, he says that the FCC will propose rules by February to “address the harmful impacts of mandatory arbitration requirements on consumers of communications services.”)

Cable and phone companies will have to tell customers what information they collect, how they use it and the types of entities with which they share it. People would have to opt-in to allow that data to be used — and companies can’t refuse to offer service to those who want to keep that information private.

The rules apply to ISPs such as Comcast and Verizon but not service providers including Google, Facebook and Netflix. The Federal Trade Commission sets privacy policies for them. They do not affect government surveillance, encryption or law enforcement.

The rules also apply only to residential and commercial ISPs, not packagers including the services you’d find in public places such as Starbucks.

But providers say that the FCC demands too much from them — potentially stifling innovation.

This “could have been a moment for the Commission to come together and make sensible bipartisan policy,” Comcast Senior EVP David Cohen said. “But once again a divided FCC chose a path that unfortunately will likely do more harm than good for consumers, competition and innovation in the all-important Internet ecosystem.”

Cable’s chief trade group, NCTA – The Internet & Television Association, said there’s “no lawful, factual or sound policy basis to justify a discriminatory approach that treats ISPs differently from some of the largest companies in the Internet ecosystem that engage in similar practices but operate under different regulatory standards.”

But consumer rights activists cheered the FCC decision.

Although the new rules “don’t impose an outright ban on harmful pay-for-privacy schemes,” they “allow the agency to keep a watchful eye on plans that would force users to make an impossible choice — whether to surrender all of their privacy just to get an Internet connection,” Free Press Policy Counsel Gaurav Laroia said.

Consumers Union’s Senior Telecom Policy Counsel Jonathan Schwantes called the rules “strong, fair and necessary as we live more and more of our lives online.”

Wall Street appears unfazed by the development.

The data privacy rules “are unlikely to materially alter economics near term” for ISPs, Barclays Capital’s Kannan Venkateshwar said. Still, “it is tough to argue that the terminal value of cable companies is higher today than it was earlier this year, given the increasing lack of visibility on future impact of regulation.”