Carrier IQ aside, the public may want their phones tracked

Since an Android (s goog) developer first detected a mysterious ‘spy’ app buried in his HTC phone, Carrier IQ has become the target of public outrage, a class-action lawsuit and even a Congressional inquiry. But a new study finds that the condemnation of Carrier IQ might be misplaced, if not a bit hypocritical. According to consumer survey data collected by the Yankee Group, the vast majority of mobile phone users want their operators to have access to the very information that Carrier IQ is selling them.

Yankee Group research director Sheryl Kingstone concluded that Carrier IQ and its partners did a horrible job when it came to the public implementation of its diagnostic platform, but she found that there was no nefarious intent behind it. The report also states that keystroke-logging tool found rooted in the depths of Trevor Eckhart’s HTC smartphone was not Carrier IQ’s phone performance monitoring software, but rather a factory testing app that HTC failed to deactivate before shipping.

If Carrier IQ had done a better job at educating customers about the presence and purpose of its app, it might have been welcomed by the public, rather than sued, Kingstone said. The Yankee Group’s consumer survey found that 85 percent of mobile phone using respondents wanted their operators to have access to detailed information about their device’s performance when they contacted a call center with a problem.

Yankee also asked what consumers’ expectations were when they called their operator with a problem. The top three answers were: 1) fixing the problem immediately, 2) remotely diagnosing the problem, and 3) empowering the call center agent to remotely fix it. If you go by Yankee’s data, consumers don’t just want their operators to know what’s going inside their phones, they want them to actively poke around inside whenever there’s a problem. Here’s what Kingstone said on Yankee’s mobile blog:

“It’s an issue of transparency, not malicious intent. Carriers — and especially consumers — want the best possible customer experience, and Carrier IQ’s software aims to do just that. Where it, and device vendors and carriers, erred was in their lack of transparency and failing to enable end-users to opt out of the service. If they had taken the opposite tack, revealing the existence of the software to end-users and providing them a potential option to opt in to ensure a better level of care, there would be no controversy, just better customer service. And that would be a win-win for all involved.”

Carrier IQ needs to be honest about its business model

I agree with Kingstone’s conclusions, so long as Carrier IQ is used only as a diagnostic tool. Networks are complicated things that require endless fine tuning, and on-device performance testing would be critical tool for optimizing those networks. I’d prefer my operator to let me know it’s recording actions on my phone, and then give me a chance to opt out, but the truth of the matter is my operator already knows plenty about me even without software like Carrier IQ’s. It knows where I am, where I’ve been, every SMS I’ve ever sent and every person I’ve ever called. We consumers have no problem with this, otherwise we would have freaked out the first time we ever saw our highly detailed phone bills.

But Carrier IQ is doing more than just selling network diagnostic info to operators, it’s selling — or at least trying to sell — to marketing analytics companies, which don’t own networks to diagnosis. Nielsen is working with Carrier IQ to integrate its device performance data with its own mobile metrics, though it will only to do so only on an opt-in basis, just as it recruits participants for all of its other measurement panels.

And Carrier IQ is definitely shopping its service around to other marketing and analysis companies. Kingstone said the Yankee Group last year investigated the possibility of buying data from Carrier IQ and other network measurement firms, but ultimately decided against it — the data was too technical to be of any much use while privacy concerns would have required Yankee to seek explicit permission from each consumer involved, she said. (The Yankee Group said that it has no current or former relationship with Carrier IQ.)

When Carrier IQ says it’s only selling data to the operators it’s either straight-up lying about the full extent of its business model or its misleading the public about its future intentions. It’s very possible this side business is innocuous, requiring explicit permission from the owner of any phone Carrier IQ tracks. Even if that’s the case, Carrier IQ needs to be upfront about that business model. Hopefully we’ll know more next week, when Carrier IQ is expected to respond to U.S. Senator Al Franken’s (D- Minn.) very detailed questionnaire about its activities.

Who else will get caught in the fallout?

Meanwhile, the voices calling for Carrier IQ’s head are growing deafening. On Friday Google CEO Eric Schmidt condemned the company at a conference in the Hague, saying that Google not only disapproved of Carrier IQ’s implementation into Android – it can not be uninstalled or de-activated – or the company’s methods, which he described as keylogging, the Telegraph reported.

Carrier IQ will most likely become a casualty of its own controversy, but whom else will it drag down? In a GigaOM Pro report, Stacey Higginbotham examines what other entities would suffer (subscription required) if Carrier IQ’s monitoring software winds up being more than it claims to be. Operators’ already fragile reputations are on the line, but Stacey concludes that consumers could wind up being the biggest losers. As faith in the operator and handset vendor erodes, consumers will be less likely to embrace new technologies and services that require a degree of trust to function. Emerging industry like mobile payment and finance as well as telemedicine could be the first casualties.