BT may have made some mistakes in the past, but this at least is one of the company’s better decisions.
The controversial Phorm system tracks users using DPI (deep packet inspection) to analyse their viewed content and habits, and target them with relevant advertising on subsequent pages.
BT carried out secret test using the system in 2006 and 2007, but without customer’s consent, and this is now being investigated by the European Commission which considers the UK government failed to protect its citizens online.
BT, which received complaints from its customers about Phorm, said the decision reflected its need to conserve resources as it prepares to invest £1.5 billion in its plans to provide a next-generation, super-fast broadband network for 10 million homes by 2012. Privately, BT bosses have become increasingly concerned about consumer resistance to advertising based on monitoring their online behaviour, and specifically about the backlash against Phorm.
The two remaining players, Virgin Media and Talk Talk still control about 75% of the UK broadband market: Virgin Media is reported to still be interested, due to the services it offers, but is now less enthusiastic with regard to to Phorm as its reputation slips; and Talk Talk is reported to have stated that it is watching, but would only implement the system on an opt-in basis, but has stated it has no time-scale in place for deployment.
One of the nastier aspects of the original Phorm system is that it was configured as an opt-out service, in other word, you were automatically rolled into it whether on not you wanted to be, and had to deliberately register your desire not to be tracked and targeted by the system.
Losing BT, its original partner in crime, and provider of secret tests carried out on unsuspecting BT customers, is a significant event, and Phorm is burning significant finds without making returns. If the backlash continues, then even though it is winning funds on the basis of future advertising returns, continuing delays and the unpopularity of being associated with the brand must just see it go belly up before it can make a profit and sustain itself.