BT backs away from Phorm’s Webwise technology

The internet and phone provider had been testing the software – which tracks the websites a user visits to match them with relevant advertising – since 2006, when it secretly trialled the technology on 18,000 customers.

Revelations of the trials caused uproar among privacy advocates, who reported the firm to the City of London Police and the Crown Prosecution Service, but no prosecutions followed. However, the European Commission did launch legal proceedings against the UK government over the way privacy laws had been interpreted in light of the trials.

A BT spokesman would not comment today on whether privacy concerns or the EC’s legal action played a part in its decision.

In a statement the company 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 today. However the interest-based advertising market is extremely dynamic and we intend to monitor Phorm’s progress with other ISPs and with Webwise Discover before finalising our plans.”

Alexander Hanff, a privacy advocate at the forefront of the campaign against Phorm, said in his blog: “I read the news and 18 months’ worth of emotion ran down my cheeks, I was unable to hold back the tears of joy and even now 10 minutes later they continue to fall.”

Phorm’s share price has fallen 40% since news of BT’s decision hit the stock market, but the firm said its activities with other UK ISPs were ongoing and efforts to launch the software in other countries were being accelerated.

“We continue to focus considerable effort on faster-moving overseas opportunities,” Phorm said. “In so doing we have already minimised our dependency on the deployment by any single ISP or in any particular market.”

The firm said that it was engaged in 15 markets worldwide and was in “advanced negotiations with several major ISPs”.

• Aside from BT, other UK ISPs with whom Phorm has had dealings are Talk Talk and Virgin Media. Research asked Virgin for an update on its relationship with Phorm, and the company issued the following statement: “Over the last 18 months, Virgin Media has conducted a comprehensive technical and legal assessment of Phorm’s technology and consumers’ attitudes towards interest-based advertising. This review has not involved the deployment of Phorm technology across our network. We continue to believe interest-based advertising has potentially important benefits for consumers, internet service providers and website owners. However, given the fast moving nature of the sector, Virgin Media intends to extend its review of potential opportunities with suppliers including Phorm prior to making any commitment to launch any of these technologies.”