British internet provider drops online tracking plans

British Telecom, one of the U.K.'s top internet service providers, has dropped a plan to engage Phorm Inc., a company that targets ads at internet users based on their online behaviour.

Phorm, in partnership with internet service providers, uses a technique called deep-packet inspection to intercept and examine information as it passes through the internet. That information, such as what websites the user visited and what search terms they used, is then analyzed to deliver ads that the user is more likely to be interested in.

BT was one of the most vocal proponents of the technology, dubbed Webwise. Its planned use of Phorm's services, however, had triggered a widespread backlash among consumer groups and politicians, and prompted an investigation by the European Commission over how well the technology safeguards user privacy.

"We continue to believe the interest-based advertising category offers major benefits for consumers and publishers alike," a BT spokesman told The Guardian, a British newspaper. "However, given our public commitment to developing next-generation broadband and television services in the U.K., we have decided to weigh up the balance of resources devoted to other opportunities."

A spokesman told the BBC that the company's decision has "nothing to do with cost or privacy."

Phorm contends that users who are being tracked by Webwise remain anonymous, even as details of their online behaviour is collected and analyzed. Phorm says it does not store any information that could identify the user. The information that is stored matches pre-approved categories that do not include sensitive topics such as illegal activities, Phorm says.

BT has about 4.8 million broadband subscribers.

Two other British ISPs, Virgin Media Group and the Carphone Warehouse PLC (which owns the Talk Talk brand) have also signed agreements with Phorm. It is not immediately clear how or when they plan to implement the system.