Bad Phorm?

When it emerged in 2008 that UK telco and broadband provider BT had trialled a technology called Phorm – which analyses Internet surfers’ web traffic at a network level in order to better target adverts at them – without users’ consent, the press had the proverbial field day.

Privacy groups were up in arms and, when the trials were eventually declared legal, so was Viviane Reding, the EU’s commissioner for information society and media.

“I call on the UK authorities to change their national laws,” said Reding in April 2009.

As it happens, BT ditched the trials earlier this year, but other Internet service providers (ISPs) are said to be still evaluating the technology, which uses deep-packet inspection (DPI) to perform fine-grained analysis of online behaviour.

A recent survey by market research firm TNS provides some insight into how UK consumers really feel about Phorm and comparable services.

There was some suggestion that the UK public is not quite as averse to the idea as the press coverage would suggest. Just under half (47%) said they agreed with the statement that “advertising tailored to their tastes and interests is a good idea”, and only 19% expressly disagreed.

When asked whether they agreed with the statement “I am happy to receive targeted advertising but only if I have given prior consent”, 60% agreed, compared with only 18% who disagreed.

“In light of this information, our view on Phorm is that if their product is used with the consent of individuals it is a much less scary product,” says Joe Webb, research executive at TNS. “And we believe that a company that offers ISP-level targeted advertising will exist, but only within limits and only with the consent of the Internet user.”

But this analysis is challenged by the fact that the proportion of respondents who agreed with the statement “Targeted advertising is an abuse of my privacy” was 41%. Only 21% explicitly disagreed, while 38% were undecided. (Before answering any questions, respondents were given a definition of ‘targeted advertising’ that suggested an ISP context.)

So the greatest proportion of UK consumers associates ISPlevel targeting with privacy infringement. It would be interesting to know how the Phorm scandal has influenced this because, as Larry Ponemon, founder of privacy think tank the Ponemon Institute, argues, trust is a key determinant in attitudes towards targeted advertising. Ponemon believes that ISP-level targeting is arguably preferable to current practices.

“In some ways, [ISP-level targeting] is safer from a privacy perspective, because you are dealing with a transaction level of information,” he explains. “You can remove a lot of the information that could otherwise be used to abuse privacy.”

This was the argument presented by the CEO of NebuAd, a US company that offered a similar service to Phorm. But deep-packet inspection reminded the American public of the wiretapping scandal that was breaking in the political sphere, Ponemon says, and they mistrusted NebuAd as a result.

The company folded after its largest ISP customers pulled out. It could be that the scandal surrounding BT’s secret Phorm trials has forever linked ISP-level targeting with privacy infringement in the minds of the British public, whatever the underlying threat to privacy may be.

Certainly, any company hoping to capitalise on the technology has its work cut out in addressing that association.  

Pete Swabey

Pete Swabey

Pete was Editor of Information Age and head of technology research for Vitesse Media plc from 2005 to 2013, before moving on to be Senior Editor and then Editorial Director at The Economist Intelligence...

Related Topics