BT to Test Phorm, Search for Cookie Alternatives

British Telecom is due to begin a live trial of Phorm’s controversial new ad-targeting technology with 10,000 of its customers. The tests, originally planned for mid-March, have been on hold while the ISP investigated alternative opt-out methods that do not require cookies to be placed on users’ computers.

If the tests are deemed successful, the ISP plans to roll out the system, branded BT Webwise, to the remainder of its users by the end of 2008.

Adam Liversage, BT’s chief press officer said trials of the system would be carried out in the “near future” with 10,000 randomly selected customers. These users will be presented with an invitation page through which they can accept or decline the test, and BT will have no way of identifying them at any point.

“We won’t know who any of the users are, so any feedback we receive is likely to be the customers choosing to do so through our forums,” he continued.

Liversage also made it clear the tests were unrelated to customer perception. “This test is not a customer referendum,” he said. “It is simply to ensure that the technology works correctly.”

Through relationships with ISPs, Phorm’s technology observes users’ online behavior, such as which sites they visit and which search terms they use, and delivers targeted ads based on this information. Despite privacy concerns, the company claims it preserves the complete anonymity of the user, and does not store any personal data about them whatsoever.

Alongside BT, Phorm announced in February it would partner with two other major U.K. ISPs, TalkTalk and Virgin Media. Together, the three companies represent at least 50 percent of U.K. Internet users, according to research firm Screen Digest.

A TalkTalk spokesperson said, “We plan to offer our customers the Phorm technology subject to the results of BT’s tests. Ultimately, it will be left to the customer to decide whether they wish to opt-in or -out of using it.”

In addition to testing the Phorm system, BT aims to remove cookies from the process. “By default, the Phorm technology places a cookie on users’ machines whether they have opted-in or opted-out,” Liversage told ClickZ News. “We have been looking for another method of doing this that does not require any cookies at all.”

The technology must be presented to all users on an opt-in basis in order to comply with a warning from the U.K. Information Commissioner’s Office earlier this month. However, users who opt-out of the system still will receive a cookie, which is required to identify and maintain their opt-out status. It is this opt-out cookie that BT is hoping to avoid.

UPDATE: This story originally reported the Phorm technology must be presented to all users on an opt-in basis in order to comply with a ruling, rather than a warning, from the U.K. Information Commissioner’s Office.