• by Wendy Davis  @wendyndavis, December 16, 2008

The U.K. Internet service provider BT Group said Monday that it has completed its most recent test of controversial behavioral targeting company Phorm's platform, Webwise, and expects to roll out the system throughout the network.

"The trial has now concluded and achieved its primary objective of testing all the elements necessary for a larger deployment, including the serving of small volumes of targeting advertising," the company said.

But BT and Phorm refused to answer questions about whether they intend to seek subscribers' explicit consent before deploying the platform, or whether Webwise will automatically monitor Web activity and serve targeted ads unless subscribers opt out. For this most recent test, the companies sought users' opt-in consent.

Phorm recently replaced its U.S. directors with board members based in the U.K., but said at the time that it still intends to launch in the U.S. The company, which has offices in New York, London and Russia, hired a lobbying firm earlier this year to represent it in the U.S.

Phorm's platform, much like a now-suspended program by NebuAd, gleans information about people's Web activity directly from broadband providers and then serves targeted ads based on sites visited and searches conducted.

Phorm says it does not store users' IP addresses and that it serves ads anonymously. But privacy advocates argue that this type of platform is more intrusive than other, older types of behavioral targeting because Internet service providers have access to every site that consumers visit. By contrast, older behavioral targeting companies only track consumers across a limited number of sites within a network.

That difference is one reason why advocates both in the U.S. and abroad have said that companies should only engage in ISP-based behavioral targeting if they first obtain users' explicit consent.

In the U.S., some lawmakers--including Rep. Ed Markey (D-Mass.)--have said they believe that ISPs should not sell information about people's Web traffic to ad companies unless users have explicitly consented. In addition, three major ISPs testified to Congress that they would only deploy behavioral targeting if subscribers expressly consented.

BT previously conducted a secret test of Phorm's platform. News of that initiative, which arguably violated Europe's sweeping privacy laws, became public earlier this year when documents about the trials surfaced on Wikileaks. Since then, EU regulators have pressured U.K. authorities to state whether they intend to take action regarding the test.