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BT begins trials on web browsing habits

01 октября 2008

BT on Tuesday begins extensive trials of a controversial technology that targets advertisements at consumers based on their web browsing habits. The UK’s leading fixed-line phone company is looking for 10,000 broadband customers who are willing to use the technology, which has been dogged by allegations of breaches of data protection laws.

BT stressed on Monday that trials of the technology developed by Phorm, an internet advertising company, would only be done with customers’ consent. It admitted it held trials of the technology in 2006 and 2007 without consent, which prompted the European Commission to raise the matter with the government in July. Viviane Reding, European telecoms commissioner, expressed concern that EU data protection laws may have been infringed.

The Department for Business said while future use of Phorm technology had raised “material concerns” about data protection, it could be introduced in a “lawful, appropriate and transparent fashion” if certain safeguards were in place. It added that use of the Phorm technology would be “closely scrutinised and monitored by the enforcement authorities”.

The City of London police said following a complaint it had decided not to launch a criminal investigation into BT’s past use of the Phorm technology. Shares in Phorm, which reports interim results on Tuesday, have fallen 60 per cent this year.

Data protection policies have risen up the agenda of internet companies such as Facebook and Google because of consumers’ privacy concerns. But BT could from next year gain a significant new revenue source by offering its 4.5m broadband customers the option to use the Phorm technology.

BT is the largest broadband provider in the UK and Phorm has developed a platform, called the Open Internet Exchange, that enables companies to target relevant advertisements at consumers based on their web browsing behaviour. Revenue derived from the advertisements will be shared between the participating websites that host them, Phorm and internet service providers such as BT.

Andrew Walsh, analyst at Landsbanki, estimated in June that by 2010 the revenue derived from UK advertising that targets consumers’ web browsing behaviour could be worth £528m. That would represent more than half of all UK online display advertising. BT’s trials in 2006 and 2007 focused on establishing the compatibility of its fixed-line network with the Phorm technology. The new trials is the first large-scale effort to determine whether the Phorm technology can function effectively with customers.

Virgin Media and Carphone Warehouse, the second and third-largest broadband providers in the UK, are planning Phorm trials.

Источник: Financial Times

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