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BT dumps targeted ad firm Phorm

Needs the funds for next-gen broadband network

By Steve Evans

BT has dropped targeted ad technology from Phorm and will not be using its Webwise platform to track the Internet use of its customers. The firm said it needed the funds to push ahead with its next-gen super-fast broadband network.

Webwise technology tracks the websites a user visits and uses this information to serve targeted ads that claim to be much more relevant to a user’s interests. Campaigners have branded that technology an invasion of privacy.

A report in the Guardian newspaper claimed that BT had received complaints from worried customers about Phorm, but that the reason behind the decision was that the telecoms giant needed the funds to fulfil its £1.5bn plan to introduce a next-generation super-fast broadband network to 10 million homes by 2012, rather than privacy issues and the negative publicity surrounding Phorm.

“We continue to believe the interest-based advertising category offers major benefits for consumers and publishers alike. However, given our public commitment to developing next-generation broadband and television services in the UK we have decided to weigh up the balance of resources devoted to other opportunities,” the Guardian quoted a BT spokesperson as saying.

The spokesperson added that the company will continue to monitor Phorm’s technology and will ‘finalise’ plans at a later date.

The announcement is another blow to Phorm’s ambition. BT’s withdrawal leaves Talk Talk and Virgin Media as the only UK ISPs in discussion with the firm and recently both Amazon and Wikimedia said they did not want their traffic monitored by ISPs using Webwise.

A spokesperson for Phorm said: “It is not a great surprise to us, to be honest. It has been a long process and we have never had a definitive date on a launch. Phorm is not just dependent on a UK model with one ISP.”

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The company is trialling its technology with KT, South Korea’s largest ISP and the Guardian claims that Phorm could announce another overseas deal soon. BT carried out three tests of the Webwise system, two secret tests in 2006 and 2007, which now form the basis of an EU investigation, and a further trial in 2008.

Phorm recently turned its attention to the consumer space when it announced Webwise Discover, a content recommendation platform that aims to serve users with news and information that is more relevant to their interests.

It uses the same deep packet inspection (DPI) technology as Webwise. DPI technology has been criticised in some quarters as an invasion of privacy due to the way it monitors the surfing habits of users.

Phorm has repeatedly defended its stance on privacy. At the launch of Webwise Discover, Phorm CEO Kent Ertugrul said: “If the level of privacy we use was the law, how many other companies would follow it? We care about privacy perhaps more than most other companies. There is no issue with privacy.”

Shares in Phorm dropped by more than a third after news of BT’s withdrawal was announced.

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