BT Drops Targeted Ad Plans

BT Group plc (NYSE: BT; London: BTA) dealt a significant blow to controversial vendor Phorm Inc. on Monday by abandoning plans to deploy the company's targeted advertising technology.

The U.K. incumbent trialed Phorm's system last year and had plans to move to a commercial deployment, despite concerns about the privacy issues surrounding the vendor's Webwise software, which tracks broadband users' Website visits to discern their personal interests and preferences, data that can then used for targeted advertising campaigns. (See BT Targets Advertising Breakthrough and Probing Net Privacy.)

BT, though, has decided it needs to focus its attentions elsewhere for now, and issued the following statement Monday morning:

We continue to believe the interest based advertising category offers major benefits for consumers and publishers alike. However, given our public commitment to developing next generation broadband and television services in the UK we have decided to weigh up the balance of resources devoted to other opportunities.

Given these resource commitments, we don't have immediate plans to deploy Webwise today. However the interest based advertising market is extremely dynamic and we intend to monitor Phorm's progress with other ISPs and with Webwise Discover before finalising our plans. (See BBC, BT Lock Horns Again, Blurred Vision at BT, BT Offers Faster DSL, BT Gets Green Light for Fiber Plans , and BT Unveils Ethernet Expansion Plans.)

The news sent Phorm's share price crashing by 125 pence, more than 26 percent, to 350 pence (US$5.64) on the London Stock Exchange's Alternative Investment Market (AIM).

Phorm reacted with a stock exchange announcement noting its U.K. activities "remain ongoing." It is still working with The Carphone Warehouse Group plc , which has just bumped up its broadband customer base to more than 4 million with the purchase of Tiscali UK , and cable giant Virgin Media Inc. (Nasdaq: VMED), which has more than 3.7 million broadband customers. The announcement stressed that Phorm also has overseas engagements. (See Tiscali Takes Next Step to Survival.)

The vendor recently announced a trial with South Korean incumbent KT Corp. , which includes the use of Phorm's latest product, Webwise Discover, a personalized Website content filter.

In addition to the U.K. and Korea, Phorm claims to be engaged with potential customers in 13 other markets and says it's in "advanced negotiations with several major ISPs."

That BT has decided not to proceed with the new capabilities just now might not come as a great surprise: The operator is focused much more on reducing its costs and unraveling the mess at its Global Services division than introducing new, resource-hungry capabilities that don't have a proven track record in commercial deployments. (See BT's Holiday Plans, BT Cuts Jobs, Capex , BT Slows Down 21CN, Scraps Converged Service, and BT Freezes Pay.)

— Ray Le Maistre, International News Editor, Light Reading