Orange Rejects Phorm But Hears The Siren Song of Ads

The Financial Times is reporting that UK ISP Orange will not use an advertising product from Phorm (s PHRM) because of concerns about user privacy. This would make Orange the odd man out in the country. BT (s BT), Virgin Media (s VMED) and TalkTalk are all still on board with Phorm, although their resolve may be weakening, judging by the fact that none of them have put Phorm’s product in commercial use yet. Phorm uses deep packet inspection to serve ads based on the sites a consumer visits. A similar company, NebuAd, caused an uproar earlier this year, after Charter Communications said it would deploy the service. Charter quickly backed off.
Paul-Fran├žois Fournier, senior vice-president of Orange’s online advertising division, expressed interest in using customer data for advertising, but says he recognized that privacy was a key issue. He told the FT, “Privacy is in our DNA, so we need to be honest and clear about what we are doing. We have decided not to be in Phorm because of that … The way it was proposed, the privacy issue was too strong.”
Privacy issues may have stopped Orange in this case, but ISPs are increasingly looking for a revenue boost, and the detailed stream of data passing through their pipes is like a vein of gold they can’t wait to mine. Earlier this year at a Congressional hearing on privacy, the major U.S. carriers sought to regulate themselves on privacy issues, while also trying to figure out a way to get consumers to buy into the practice through lower rates or promising a better surfing experience.
Given that Time Warner Cable (s TWC) is able to market a bandwidth cap to people in Beaumont, Texas, under the guise of a lower-priced bundle, I’m sure cable and telecommunications companies will figure out the right incentive for most people to give up their privacy.