Phone companies sell customer data
Instead of merely offering a trusted conduit for communication, carriers are coming to see subscribers as sources of information that can be mined for profit.
Big phone companies have begun to sell the vast troves of data they gather about their subscribers' locations, travels and Web-browsing habits.
The information provides a powerful tool for marketers but raises new privacy concerns. Even as Americans browsing the Internet grow more accustomed to having every move tracked, combining that information with a detailed accounting of their movements in the real world has long been considered particularly sensitive.
The new offerings are also evidence of a shift in the relationship between carriers and their subscribers. Instead of merely offering customers a trusted conduit for communication, carriers are coming to see subscribers as sources of data that can be mined for profit, a practice more common among providers of free online services like Google (GOOG) and Facebook (FB).
New streams of income
When a Verizon Wireless customer navigates to a website on her smartphone today, information about that website, her location and her demographic background may end up as a data point in a product called Precision Market Insights. The product, which Verizon launched in October 2012 after trial runs, offers businesses like malls, stadiums and billboard owners statistics about the activities and backgrounds of cellphone users in particular locations.
Several European mobile-network operators have launched similar efforts. This week, German software giant SAP (SAP) is introducing a service that will gather smartphone-use and location data from wireless carriers and offer it to marketing firms.
Carriers acknowledge the sensitivity of the data. But as advertisers and marketers seek more detailed information about potential customers and the telecom industry seeks new streams of revenue amid a maturing cellphone market, big phone companies have started to tiptoe in.
The companies say they don't sell data about individuals but rather about groups of people. Privacy advocates say the law permits them to do so. In 2011, Verizon sent notice to customers saying they may use their data in this way.
Chris Soghoian, a privacy specialist at the American Civil Liberties Union, says the ability to profit from customer data could give wireless carriers an incentive to track customers more precisely than connecting calls requires and to store even more of their Web browsing history. That could broaden the range of data about individuals' habits and movements that law enforcement could subpoena, Soghoian says. "It's the collection that's the scary part, not the business use."
No data on corporate or government clients
Verizon responds that the data it analyzes for Precision Market Insights is information it already collects and that it complies with legal processes when it gets requests for information from law enforcement.
The carrier also says that it will sell only broad information about groups of customers, and that the program won't include information from Verizon's government or corporate clients. Most other individuals' data will be used by default, but people can opt out on Verizon's website.
Jeff Weber, AT&T's president of content and advertising sales, says his company is studying ways to sell and analyze customer data for advertisers while letting customers opt out, but so far the company doesn't have a product akin to Verizon's.
It's tricky territory. Last year, Spanish carrier Telefonica provoked a political outcry in Germany over its plans to sell aggregated location data and eventually said it didn't plan to launch the program there.
Verizon's data service is being used by the Phoenix Suns. The basketball team has used it to map where people attending its games live in order increase advertising in areas that haven't met expectations, says Scott Horowitz, a team vice president.
The carrier, a joint venture between Verizon Communications (VZ) and Vodafone Group (VOD), has used its data to tailor its own marketing message, according to Colson Hillier, who oversees the data-mining program.
All about eyeballs
Clear Channel Outdoor Holdings (CCO), one of the world's biggest billboard companies, has agreed to conduct a trial of the Precision service, according to Suzanne Grimes, Clear Channel's North America president. She says the service could allow billboard owners to measure how likely someone driving by is to go to the store being advertised. "You've got an industry that was historically about eyeballs," she says. "Now you know more about who those people are and what their behavior looks like."
SAP's offering will take an even broader approach. SAP Mobile Services President John Sims says the service will sift through huge volumes of data about how and where people use their mobile devices and then share the revenue from selling the information with the wireless carriers providing the data.
SAP hasn't said which carriers it's working with, but it described the process. When a smartphone user clicks on a Web link, the action will generate a data point, including basic information about the website the user is visiting along with the user's location as precisely as within 30 feet and demographic data.
SAP will then aggregate and analyze that individual subscriber data and provide statistics to clients about the usage habits at a particular location of groups of as few as 50 people. One possible use: Retailers worried about "showrooming," or inspecting products that the shopper will eventually buy online, can find out what websites people visit on their phones when they're in their stores.
Mat Sears, a spokesman for U.K. wireless operator EE, a joint venture of Deutsche Telekom and France Telecom, says the company is evaluating the SAP product and views the ability to sell and analyze data about how people use their smartphones as "a potentially game-changing opportunity."
Meanwhile, Americans have become more comfortable disclosing their locations via social-media services like Twitter and Foursquare. Indeed, as carriers get more involved in data mining, they could find themselves competing with those companies and Internet giants like Google and Facebook.
But the carriers say that they have more comprehensive data. "This is the information that everyone has wanted that hasn't been available until now," says the Suns' Horowitz.
More from The Wall Street Journal:
Law makers have not kept up with technology when it comes to privacy. But general laws could be passed to do it. Where are our elected officials? Do nothing Congress.
How come you still have to pay for cell and cable service if they are data mining you for profit? Just asking....
Screw 'em ... every one of 'em !!!
Somehow phone companies will figure out a way to charge you for them selling your private information. I called up Cablevision when they came out with their $3.00 fee on the Sports Package and asked what it was for and the gentleman said in essence that they were charging me $3.00 in order to keep the other companies from charging me more. I just wanted to bang my head against the wall after hearing that utter bullsh*t.
If I take a photo of a celebrity, I can't profit by it (you will have 20 lawyers at your front door before you can turn on the History Channel that no longer shows history), but somehow phone companies can take the information of where I am, where I shop, what I buy, where I drive, who I call, how long I stay somewhere, what I buy, etc. and sell that for profit all the while coming out with price increases and new fees every month.
Who works in tandem with the phone companies?
THE CREDIT BUREAUS !!!
Who owns the largest depository of our confidential information?
The Credit Bureaus!
Who is the largest reseller of our most confidential information?
The Credit Bureaus!
Who decides what is sold about you and to whom?
The Credit Bureaus!
How do they get away with this?
Because we let them, and like Identity Theft, it doesn't concern us until it is too late!
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