Amazon to side step Phorm!

In an increasingly heated debate over privacy, Amazon UK has stated that it will not allow the online advertising system of Phorm to scan its web pages to produce targeted ads.

 

Amazon is one of the most popular sites in the UK and indeed worldwide and its decision to block behavioural targeting of the type promoted by Phorm is a huge blow to the approach and will no doubt influence other major sites such as eBay to review their policy. 

 

This decision will be a major embarrassment to BT who had hoped to roll out Phorm’s technology later this year under the name Webwise.  Both BT and Phorm have come under fire from privacy campaigners over the the “secret” trials that BT conducted last year.

 

In a statement, Amazon UK said: "We have contacted Webwise requesting that we opt out for all of our domains."  The company declined to comment further on the reasons behind its decision.

 

In response, Phorm said: "There is a process in place to allow publishers to contact Phorm and opt out of the system, but we do not comment on individual cases."

 

Last month the Open Rights Group wrote to the chief privacy officers at Microsoft, Google/Youtube, Facebook, AOL/Bebo, Yahoo, Amazon and Ebay urging them to opt-out of Phorm. Amazon is the first company to give any sort of response at all but are unlikely to be the last.

 

Earlier this week the European Commission said it was starting legal action against the UK over its data protection laws in relation to Phorm's technology.  The European Commission has described the technology as an "interception" of user data and wants UK law to reflect more explicitly the need for consent from users in order for the service to be implemented.

 

Given the recent announcement of Google to introduce their own form of behavioural tracking on to users search queries, it will be interesting to see whether Amazon et al decide that they wish to avoid all forms of intrusive targeting and whether the EU will take on the behemoth Google.

eBay puts Skype up for sale.

Last night eBay, the internet auction site, announced plans to spin off Skype the internet calls business in an initial public offering some time next year. 

Four years after paying $3.1 billion for Skype, eBay has finally admitted what every other industry insider realised years ago that it there really weren’t any valuable synergies to be gleamed from adding Skype to its core auction business.

The decision to sell the company opens the door for any private equity buyers to move in on Skype although it seems unlikely that anyone is already in the frame..  However, it leaves open the possibility that the creators of Skype, the billionaire Scandinavians, Janus Friis and Niklas Zennstrom, could repurchase the company since their other venture Joost is hardly creating much of a stir. It is reported that they are working with the private equity firm, Warburg Pincus,  to make a bid for Skype and eBay’s move may be interpreted as putting pressure on them to put up or shut up!

John Donahoe, the chief executive of eBay, said: “Skype is a great stand-alone business with strong fundamentals and accelerating momentum. But it is clear that Skype has limited synergies with eBay. We believe operating Skype as a stand-alone publicly traded company is the best path for maximising its potential.”

EBay's plans were cheered by investors, who sent the shares up 56 cents, or 3.9 per cent in after-hours trading on Wall Street. They saw Skype as an unnecessary distraction that was tying up capital.  In 2007 eBay, which is being advised by Goldman Sachs, conceded it had massively overpaid for the calls company when it took a writedown of $1.4 billion. Last year Skype generated revenues of $551 million, up 44 per cent from 2007. Its user base - now at 405 million - leapt 47 per cent from 2007.

If Friis and Zennstrom do buy back Skype, eBay is unlikely to receive anything close to what they paid for the company back in 2005, but they will be able to focus on growing the eBay business as the recession comes to an end and those “green shoots” of recovery start to take root.

Europe steps into save UK Users from Phorm's snooping!

Finally someone is willing to fight for our rights to privacy in the UK.  Sadly it isn't our Government. The European Commission has today started legal action against the Government over its failure to protect the privacy of British Internet users.

The case was sparked by BT’s covert use of the controversial user-tracking technology Phorm on customers using BT’s internet service in 2006 and 2007.

Phorm, a UK-based company founded in 2004, monitors users’ favourite sites and searches, and uses the information to deliver individually targeted advertising.  The European Commission has been concerned about the way Phorm was secretly tested in the United Kingdom. Last year, the Government through the Information Commissioner, backed Phorm after a complaint by Brussels.

However, Vivian Reding, the European Union's Commissioner for Information Society and Media, announced the first stage of legal action, saying that the UK Government had failed to implement European laws that protect Internet users under the terms of  'The Privacy and Electronic Communications (EC Directive) Regulations 2003'.

"Technologies such a Internet behavioural advertising can be useful for businesses and consumers but they must be used in a way that complies with EU rules,” the Commissioner said. “These rules are there to protect the privacy of citizens and must be rigorously enforced by all member states.”

BT has already admitted that it conducted trials of Phorm without users’ consent in 2006 and 2007. A further, invitation-only, trial was conducted last year.

Ms Reding’s statement continued: “I call on the UK authorities to change their national laws and ensure that national authorities are duly empowered and have proper sanctions at their disposal to enforce EU legislation on the confidentiality of communications.”

Ms Reding’s contention is that UK laws must be tightened to protect consumers and comply with the ePrivacy Directive, which the UK Government signed up to in 2002. It came into force at the end of October 2003.

The Commission has now given the Government two months to respond to today’s “infringement proceeding” - the first stage of a legal process which could end up in the European Court of Justice for an alleged breach of the directive.  The directive states that user consent must be “freely given, specific, and informed”, and it requires EU member states to impose sanctions in the event of breaches of the rules.

Ms Reding reinforced her stern message to the British Government in her weekly video message, delivered via the European Commission’s website.

“Privacy is a particular value for us Europeans; a value reflected in European laws for many years,” she said.

“However, in spite of the many advantages of technological development, there is an undeniable risk that privacy is being lost to the brave new world of intrusive technologies. On the global information highways, personal information is increasingly becoming ‘the new currency’. And I believe that Europeans… must have the right to control how their personal information is used.”

“European privacy rules are crystal clear,” she said. “A person's information can only be used with their prior consent. We cannot give up this basic principle, and have all our exchanges monitored, surveyed and stored, in exchange for a promise of ‘more relevant’ advertisements! I will not shy away from taking action where an EU country falls short of this duty.”

Phorm has already been investigated by the police and the Information Commissioner over privacy concerns. It has attracted interest from UK ISPs including BT, Virgin Media and TalkTalk although no company has yet fully introduced the system.

Tim Berners-Lee spoke out passionately against Phorm at a meeting in the House of Commons in March this year. "It is very important that when we click, we click without a thought that a third party knows what we're clicking on," he said. "'What is at stake is the integrity of the Internet as a communications medium. It's important there should be no snooping on the Internet."

It has always been the contention of Blogcetera and many other industry observers that what Phorm was engaged in was both against the 'spirit' and the letter of the law as laid down in the EU directive that the British Government and Parliament passed into law.  Similarly there are privacy concerns as regards Google’s plans to use behavioural targeting to deploy “relevant” ads to users.  It will be interesting to see whether the EU Commission targets Google as well as Phorm.

Links  :The Privacy and Electronic Communications (EC Directive) Regulations 2003

Additional Reporting: The Times

Phorm to pay for opt-in customers.

Phorm, the targeted web advertising company, is considering offering customers who opt-in a payment related to their surfing activity.  Phorm is considering contributing to the customers broadband bill or is even willing to make a donation to charity, for any user that signs up for the service.

With BT contemplating rolling out Phorm's service to known as BT "Webwise" it may be that BT customers will be able to receive a reduction in their broadband bill.

The fact that BT and Phorm had been conducting secret trials of the system without BT’s customers’ knowledge caused major concerns over privacy last year and led to the Information Commissioner suggesting that the scheme should only be implemented as an "opt-in" service.  

Given the general suspicion that users have in respect of their surfing activity being tracked, the payment to encourage "opt-in" will need to be significant for most users to accept such a service.

Australia shows how to create a 21st Century Network

Australian Prime Minister Kevin Rudd has created a public private partnership to sort out the country's poor broadband network.

The programme aims to link 90 per cent of Aussie homes, schools and businesses with speeds of up to 100 Mbps - true FTTH. The remaining ten per cent of premises will get wireless or satellite links with speeds of up to 12 Mbps

The government is establishing a company to build the fibre network which it expects to cost $43bn (£20.8bn) and take eight years to complete. It will provide jobs for 25,000 people a year on average.

The government will be the majority shareholder, but intends to sell its stake within five years of the network being completed. The cash will come from the sale of consumer Aussie Investment Bonds (AIBs) and funds from the Building Australia Fund.

Rudd said slow broadband was holding Australia back. He compared a decent fibre network with the railway networks of the 19th century.

He reckons the project is Australia's largest ever "nation-building infrastructure project". Rudd had asked for private sector bids for the work but none were considered viable.

The first step will be negotiating with Tasmania which could start its fibre to the premises network as early as July. New builds will be required to provide fibre from July 2010.

Alongside this huge investment Rudd promised wholesale telecoms reform - the public has until 3 June to make its suggestions for changes.

Australia has always suffered from slow and expensive broadband for years.  Some of this can be blamed on geography, although the incumbent telco, Telstra, is also culpable..

However, if Gordon Brown is serious about providing Britain with a 21^st Century infrastructure he should start talking to Rudd.  Guaranteeing that everyone will have access to 1.5Mbps is just pathetic and we will continue to languish in the bottom division of broadband access.   In a previous article I referred to the developments of Fibrecity projects by i3 Group Ltd.  These guys deserve massive support to roll out the planned 15 locations as quickly as possible.

We need to join the Ethernet club now and get full FTTH to every home in the country and stop relying on the whining of BT experimenting with some 40Mbps service options.  It just will not do.  The UK needs an integrated national fibre infrastructure not some half baked commitment to ADSL access and the cost  of full FTTH would far less than saving a single fat cat bank, have lasting value and create thousands of jobs.

New Local Government service – FTTH?

Recent developments in Dundee and Bournemouth have suggested that soon you will be able to source your 100 Mbps FTTH along with rubbish collections.  Bournemouth Borough Council is using technology from i3 Group Ltd (formerly H20networks) to build out their new Ethernet speed network throughout the district.  What started as a project to deliver a new network to interconnect all their 5,000 staff is rapidly growing to a plan to deliver FTTH to 88,000 of the Borough’s households.

Bob Rhodes, IT Project Manager, Bournemouth Borough Council comments: “In partnership with H20 Networks we are making tremendous cost savings, meaning that we can put Council Tax payers’ money to better use”.  One of those better uses seems to be to deliver FTTH capability to the all homes and businesses within the Bournemouth Borough Boundary.  The residents of Bournemouth have been receiving letters asking them to grant permission for a free connection.  i3 Group are using Bournemouth's network of underground sewers to deploy its fibre optic cabling.  The entire project will cost in the region of £30m and ultimately connect 88,000 homes and is to be designated as the first Fibrecity.

The Fibrecity project of i3 Group officially connected the first 50 homes in Bournemouth to its next generation network FTTH broadband network, with speeds of up to 100 Mbps. The group is now known to be targeting a nationwide rollout figure of 2,000 homes per week and more once additional fibre cities come on tap. Bournemouth is the first of 15 town and city-wide fibre networks being built across the UK by Fibrecity over the next 10 years.  Work has also started in Dundee to reach 55,000 homes. 

This true FTTH infrastructure sees two fibres installed to each property that connects to the Fibrecity network using underground sewers, which is cheaper than digging up the road to lay new cable. One fibre enables homeowners to benefit from paid for services such as IPTV, telephony and super fast 100 Mbps broadband connectivity. A separate 40 Mbps fibre is dedicated to the council and will be used to deliver local services such as community TV and health services.

Cable broadband provider Virgin Media recently launched a 50Mbps broadband service which, while not a true FTTH deployment, is currently the fastest consumer broadband service in the UK. Virgin aims to have the service available to all its customers by the end of this summer. Meanwhile telco BT has also unveiled fibre-based plans, announcing a £1.5bn investment to bring fibre to 10 million UK homes by 2012.  Neither of these two initiatives will offer the fully duplex services that FTTH can deliver.

The creation of these Fibrecity projects is an extremely interesting development of it may lead to the first direct local authority delivered network to be established since Kingston Telecom remained independent of the GPO National Telephone service when the rest of the country’s telephone exchanges where rolled into the forerunner of BT back in 1914.

The entry of Local Authorities into the ISP business could significantly accelerate the access of the public to the new super fast FTTH services. Equally it could lead to the increased “politicalisation” of service provision and control.  Either way it is an exciting development.  With the UK not even in the top 100 countries with these super fast services of FTTH and FTTB, the Fibrecity initiative is a welcome step in the right direction.

UK ISP, Cable and Dongle User Numbers - April 2009

Here is an update of the UK ISP market covering DSL and Cable Access market as well as the Mobile Dongle market in the UK. I have used ITU published data for Broadband usage numbers and Neilson Ratings and ISP published figures to get an accurate picture as well all the reports and disclosures for each of the companies shown below. I believe these figures represent a reasonably accurate representation of the genuine adoption of broadband either via DSL, Cable or mobile dongle. Broadband connections included in this data cover download speeds equal to or faster than 256kbit/s.

ISP      Total    % of   UK Accts. BT (inc Plusnet) 4,700,000 26.05% Virgin Media (inc Virgin.net) 3,934,800 21.80% CPW (inc AOL) 2,700,000 14.96% Sky 1,955,000 10.83% Tiscali UK 1,768,000 9.80% Orange 1,000,000 5.54% Royal Mail 560,000 3.10% O2 (Be & Dongles) 340,866 1.89% 3 (Mobile Dongles) 255,000 1.42% Kingston 203,000 1.12% T-Mobile (Dongle) 161,000 0.89% Vodafone (Dongle) 132,000 0.73% Thus 126,000 0.66% Entanet 92,000 0.51% Clara.net UK 72,000 0.40% Breathe 12,000 0.07% Supanet 6,000 0.03% Others 28,000 0.16% Total 18,045,666 100.00%

 

The UK market exceeded 18 million broadband connections for the first time with all the growth being shown by the dongle market.  Both Tiscali and Orange again reported lower figures and still no news on the Tiscali sell-off.  The new battle ground for users appears to be shifting to the FTTH (fibre to the home) and FTTB (fibre to the building).  BT announced their high speed initiative targeting 29 areas with their 40 Mbps offering.  Virgin complained that many of the areas targeted were already served by their 50Mbps service.

An interesting development is the planned development of local authority run “ISPs” planned on the back of i3 Group Ltd (formerly H20Networks) in Dundee and Bournemouth who could be offering Ethernet interconnectivity to the home of a fully duplex 100Mbps 55,000 and 88,000 homes respectively. Whether these locally run ISPs ever emerge is an interesting thought since it will lead local councils into the tricky area of service provision and possible political control of services delivered or “surfed” for by their customers.

Google in attempt to grab the Twitterati

It is reported by Techcrunch, that Google is in "late stage" talks to acquire microblogging service Twitter.  Twitter is the micro-blogging phenomenon that lets people known as the Twitterati, post short 140-character messages. Other users subscribe to follow the stream of these tweets from acquaintances and, increasingly, companies and celebrities. After an unpleasant rocky period when the company's servers frequently were crushed under the strain of the service, the Twitter has experienced tremendous growth.

As Google's tries to find an alternative cash cow as successful as their core technology of search they have been increasingly buying up new and exciting opportunities. Twitter would seem to be its latest attempt to break its dependence on search and search related advertising.  In common with the likes of News International and eBay, Google are keen to exploit the online activity of social networking and instant messaging/communications.  Facebook, which attempted to acquire Twitter in 2008, is the best example of just how rich a medium the Internet can become for social interactions. However, social sites have had a hard time showing they can generate revenue and profits as well and recent numbers from MySpace suggest that News International’s ownership is not seen as attractive to either users or key staff.

 

Twitter isn't just about sharing with friends, though. It's increasingly about search as well. Twitter has been working to elevate the prominence of search, which can give a near-real-time window into what's on the mind of innumerable users.  This fits in well with Google’s desire to be able to track our every thought and deliver a relevant ad to fit our stream of consciousness.

 

If Google does manage to capture Twitter will the Twitterati appreciate Google using their twittering to generate profits based on a “better matching of results with what people are actually seeking”.

 

MySpace is out there as an example of how users react when a big corporate wish to exploit their fun.  There is always an alternative and Google may find that the Twitterati just cannot be bought.

Google didn't immediately respond to a request for comment.

Additional Reporting: Techcrunch