In U.K., ISP-Based BT Gets Thumbs-Up

In the U.S., behavioral targeting company NebuAd was forced to retreat from a plan to purchase information about people's online activity from ISPs and then serve ads based on subscribers' Web histories. But in the U.K., authorities have not only cleared ISP-based behavioral targeting company Phorm, but appear to be rooting for it.

The U.K. communications agency Ofcom has endorsed behavioral targeting as one way to increase ISPs' revenue, according to PC Pro. "The introduction of new business models can be controversial, but may be very important in the delivery of new access networks," Ofcom wrote in a document released today.

At the same time, the agency posits that regulation could benefit the industry by "improving consumers' perception of behavioural advertising."

Phorm recently got another break. The City of London police have decided not to investigate Phorm and the ISP BT for a secret test of Phorm's platform in 2006, according to The Register.

This news comes just one week after U.K. authorities said Phorm was capable of operating lawfully provided it gave consumers notice about its program and let them decide whether or not to participate in it.

Privacy advocates are questioning all forms of behavioral targeting, but they view companies like Phorm and NebuAd, which use ISP-based methods, as especially threatening. The key difference between ISP-based targeting and network-based efforts is that ISPs have access to far more information about users' Web activity, ranging from every search query entered and every site they visit.

Speaking at an industry conference this week, FTC attorney Laura Stack indicated that the agency agrees that ISP-based targeting is different from older forms of behavioral targeting. She pointed out that not only can ISPs track users on portals and search engines, but that they can track users even on noncommercial destinations, such as a Web site run by a church, or one operated by a physician.

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