In the U.K., the broadband company BT conducted a secret test of Phorm two years ago. For that test, BT deployed Phorm's tracking and ad-serving technology on 18,000 customers for two weeks, without telling them or allowing them to opt out. Details of that test were leaked to Wikileaks.org, which posted a complete report about it several months ago.
Cable One's secret test of NebuAd involved 14,000 subscribers and lasted for six months.
While it's too soon to know whether Cable One will face lawsuits or Congressional wrath -- though both seem plausible -- there's already been some fallout from Phorm's test with BT.
Regulators from the EU -- which, unlike the U.S., has a comprehensive privacy law -- are demanding that the British government clarify its stance on Phorm.
"Several EU law provisions concerning privacy and electronic communications may be applicable to other activities involved in the deployment of Phorm technology by ISPs," the EU wrote in a letter to UK officials that was obtained by The Register.
The letter goes on to remind UK authorities that members of the EU are required to "ensure the confidentiality of communications and related traffic through national legislation" and "required to prohibit listening, tapping, storage or other kinds of interception or surveillance of communications and the related traffic data by persons other than the users without their consent."
The EU requested that U.K. officials state their position about the legality of Phorm's 2006 test and of the upcoming planned deployment. The Registerreports that the U.K. didn't respond to the letter by a July 31 deadline.
Nonetheless, Phorm says it expects to launch in the U.K. soon and also anticipates entering the U.S. market. Much like NebuAd, the company also asserts it respects users' privacy and wants to allow users to decide whether or not to participate in its ad-serving platform.
A Phorm spokesperson recently told MediaPost that it "will continue to work with legislators and regulators to ensure that our legally compliant system is deployed in a way that exceeds current Internet advertising industry standards for privacy online." The company also says that "participation will always be a transparent choice."
Of course, Cable One now says that it, too, will not move forward with NebuAd's behavioral targeting platform without seeking users' opt-in consent.
This change of heart, after conducting secret tests, might not carry much weight with privacy advocates or Capitol Hill. Rep. Ed Markey has been saying for weeks now that ISPs shouldn't sell information about people's Web surfing without their explicit opt-in consent. The fact that a company like Cable One did so without even letting users opt out of the program could be the final straw that spurs new legislation.