Orange, the mobile and broadband operator, has decided not to use Phorm’s targeted advertising technology because of concerns about protecting its customers’ data.
Paul-François Fournier, senior vice-president of Orange’s online advertising division, told the FT that there was “huge potential” for telecommunication companies to use customer data to target advertising but managing customers’ privacy was “critical”.
“Privacy is in our DNA, so we need to be honest and clear about what we are doing,” Mr Fournier said. “We have decided not to be in Phorm because of that ... The way it was proposed, the privacy issue was too strong.”
Advertising could be a new way for broadband providers to profit from their subscribers, as telecom companies strive to compensate for declining voice revenues.
Phorm’s technology tracks web surfing and targets advertising based on it, which it then shows to broadband customers who have opted to receive it.
Technology that tracks browsing is not new but by positioning itself at the heart of broadband networks, Phorm says it can gather more data than other “cookies” from companies such as Google or Microsoft.
Phorm’s admission that it conducted trials on BT customers in 2006 and 2007 without their consent caused outcry from privacy campaigners and prompted questions from the European Commission, though the UK government has said Phorm does not break the law.
Mr Fournier said the Phorm model currently lacked “clarity” on customers’ privacy. He did not rule out using Phorm or another provider of targeted advertising technology in future, but said further customer consultation was required.
Kent Ertugrul, Phorm’s chief executive, said that independent auditors had established Phorm as the “gold standard for privacy by quite some way”.
“We have spoken with the entire online advertising industry, most major ISPs [including Orange], many, if not most, of the major advertisers – and this is an idea whose time has come,” said Mr Ertugrul. Phorm was in “quite advanced” ongoing conversations with several ISPs, and was in trials with one ISP outside the UK, he added.
Last month, BT began a trial of Phorm’s technology, which it has branded “BT Webwise”, with up to 10,000 volunteers. Virgin Media and Carphone Warehouse are also assessing Phorm’s system; together the three ISPs have more than 70 per cent of UK broadband users.
Mr Fournier said that Orange would survey customers about what data they were comfortable sharing with advertisers, what rewards they would like in return, and how they would opt in or out.
Phorm’s shares closed unchanged at 187½p on Wednesday.
