BT Does U-Turn And Drops Phorm

BT today confirmed it has done an about face on its plans to roll out controversial web monitoring technology from Phorm.

In a statement it said would abandon plans to tailor advertising according to the analysis by Phorm of its broadband users’ habits with “interest based advertising”.

It said: “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.

“Given these resource commitments, we don’t have immediate plans to deploy Webwise [from Phorm] today. However, the interest-based advertising market is extremely dynamic and we intend to monitor Phorm’s progress with other ISPs [internet service providers]…before finalising our plans.”

The move echoes The Guardian newspaper’s decision to abandon talks with the company in March last year, when there was a public outcry in response to reports that BT had been been trialling Phorm’s deep packet inspection (DPI) web-monitoring technology secretly on users.

Virgin Media, which signed a memorandum of understanding with Phorm, along with Talk Talk and BT to evaluate the technology, issued a statement responding to BT’s decision, saying it would further review its potential use and possible trial.

“We continue to believe interest-based advertising has potentially important benefits for consumers, internet service providers and website owners,” said the Virgin Media statement. “However…we recognise some consumers have significant concerns about the potential implications of interest-based advertising for their privacy.”

The rival telco said it was committed to ensuring that any future deployment complies not only with the relevant legal requirements and best practice internet advertising guidelines.

But Phorm itself had to rush to reassure investors about its business in the wake of BT’s decision as its shares tumbled on the news this morning. It stressed it was working with 15 ISPs. It stated: “We continue to focus considerable effort on faster moving overseas opportunities. In so doing we have already minimised our dependency on the deployment by any single ISP or in any particular market.”

Meanwhile, not surprisingly, privacy groups are hailing the BT u-turn a victory. Alex Hanff of the NoDPI pressure group blogged that “now finally, after 18 months Phorm’s House of Cards is falling”.

Hanff also pointed out BT’s u-turn comes the day before the All Party Parliamentary Communications Group launches its internet privacy investigation after European Union (EU) moves moves to sue the UK government for failing to uphold EU privacy laws and stop BT’s secret Phorm trials.

BT’s move may be welcome to the Government – Number 10 had refused to act on complaints about Phorm despite the EU action and consumer complaints.