AT&T says that it will charge $70 instead of $99 for its GigaPower fiber-to-the-home Internet service in some Austin neighborhoods, but there's a catch - customers' privacy will be affected as the network operator will track online activities of its users who opt for the discount.

AT&T says that to avail of the lower price for the Internet offer, they must agree "to participate in AT&T Internet Preferences." The fine print suggests that AT&T may use its customers' web browsing activities such as the search terms entered in any search engines and also the web pages they visit. AT&T will then provide customized and relevant ads to these customers.

However, AT&T is not the first to adopt targeted advertising business model. Amazon is using the same model for its lower priced Kindle tablets that cost less if you elect to let the tablet show you ads. 

The wireless carrier also promises not to collect confidential information. 

"We use various methods to collect web browsing information, and we are currently reviewing the methods we may use for the Internet Preferences program. Whichever method is used, we will not collect information from secure (https) or otherwise encrypted sites, such as online banking or when a credit card is used to buy something online on a secure site. And we won't sell your personal information to anyone, for any reason," AT&T said.

AT&T shares closed down 1.3 percent at $33.95 on the NYSE on Wednesday.