BT to test Phorm again, this time telling customers

UK internet service provider BT, a branch of British Telecom, will be running another trial of the controversial behavioral advertising system Phorm.

Last February, British ISPs BT, TalkTalk and Virgin Media announced that they had joined together to deliver a targeted advertising platform. However, this was met with public outrage when BT admitted that it had already tested such a system with secretly collected user data.

Advocacy groups such as the Foundation for Information Policy Research rallied against the idea, and users petitioned "to stop ISPs from breaching customers privacy via advertising technologies."

Today, Phorm and BT announced that tests of the system will continue (PDF of announcement available here), but this batch will not be done surreptitiously. The platform will be known as "BT Webwise" and participation is purely optional.

Phorm claims to be different from other methods of behavioral tracking, in that no sensitive information is retained. The telco's site says, "As someone browses online, Phorm matches his or her searching or browsing behaviour against pre-defined advertising categories for everyday products, like travel or sport, by looking at URLs, search terms, or the ten most frequently occurring keywords on the page being visited. The raw data used to make the match is deleted in real time -- by the time the page loads -- so that no personally identifiable data is stored."

In July, the US Federal Trade Commission expressed cautious optimism that behavioral targeting such as the kind performed by Phorm can be easily addressed by industry self-regulation. With due transparency and user control, the FTC believes targeted advertising such as Phorm is not a direct infringement of personal privacy.

At the same time however, the European Commission warned the UK government that BT's secret tests could end up in the European Court of Justice as a breach of consumer privacy if the problem was not dealt with domestically.

Last week, however, London Police CID responded to a complaint from Alexander Hanff for investigation into the matter. The police declined investigation because it is "considered a civil dispute, and your desire to elicit clarity around the wording of the relevant acts would necessitate senior Counsel involvement and it is thought this would be inappropriate for Police to use Public funds to pursue civil issues where there is no suggestion that Criminal Intent exists."