BT scraps Phorm rollout

BT is taking a 'wait and see' approach to Phorm

BT has dropped plans to roll out the controversial Phorm technology, claiming that it does not have sufficient resources to support the deployment.

Phorm is a behavioural advertising company that uses browsing information to serve accurately targeted advertisements to web users.

The firm's Webwise technology tags browsers with a cookie which captures all the web sites a person visits, rather than just the content of a single web page. This has raised concerns with privacy experts that the system is too intrusive.

However, on the same day that BT offered staff a year at home in return for a 75 per cent pay cut, the company said that the decision to halt Phorm deployment is not down to consumer concerns.

"We have other big things on the go at the moment, like the rollout of fibre to support nationwide access to broadband and our Project Canvas venture in TV, " said a BT spokesman.

BT is committed to investing £1.5bn in rolling out fibre to about 40 per cent of its national network by 2012. The firm has also launched a venture with the BBC and ITV to give viewers access to on-demand programming of past shows.

"We have no immediate plans to deploy Phorm. Parking it lets us monitor the progress Phorm has with other internet service providers (ISPs), such as TalkTalk, Virgin and those signed up internationally, to see how they get on," explained the spokesman.

However, BT could give no idea at what stage - if any - Phorm would be deemed a success in its rollout by other ISPs.

"We have no formal evaluation process or monitoring criteria in place to judge the technology," the spokesman said.

BT was the most advanced UK ISP in its plans for rolling out the advertising system, and the decision is a major blow to Phorm, which currently has no revenue model.

BT secretly trialled the technology in the summer of 2007, and has held two further trials since. The telco said in December 2008 that it had finished testing all the elements necessary for larger deployment, and would move towards a rollout. But BT has been secretive about its plans since that announcement.

Phorm said last month that it will lose an average of £1.1m a month until ISPs start deploying Webwise. This is in addition to a loss of £30.4m in 2008, and £20m the previous year.

"As regards our UK deployment, Phorm's activities remain ongoing and we look forward to creating the conditions necessary for UK ISPs to move to deployment, " said the firm in reaction to the BT news.

Phorm also said that it is concentrating its efforts on overseas opportunities in order to minimise the dependency on a single market.

"In addition to making excellent progress in South Korea we are engaged in more than 15 markets worldwide, including advanced negotiations with several major ISPs," said Phorm.