New rules that will soon require US mobile phone companies to track their customers in an emergency will use technology that opens up a host of marketing opportunities, but also potential privacy headaches.
Marketers salivate when they think of sending targeted coupons and advertisements to mobile phones that are carried near shopping areas, for example. But the wireless phone companies, mindful that many customers despise telemarketers who bother them at home, are approaching the technology cautiously.
Companies like AT&T Wireless Group (AWE.N), among others, are developing an "opt-in" process that would allow marketing only where consumers give specific consent, a privacy protection policy that is unusual among major US industries.
The "opt-in" stance of wireless companies is in stark contrast to the "opt-out" position of banks, which recently released a flood of mailings, which their customers must return to avoid their personal data being used to market products and services.
"The consumer will be the one who makes the decision," said Thomas Wheeler, head of the Cellular Telecommunications & Internet Association (CTIA), the main trade association for wireless companies.
While the financial rewards are tempting, the privacy nightmares are too large for the wireless industry to ride roughshod over consumers' concerns, experts said, resulting in the break with unfettered marketing in favor of privacy standards normally seen only outside the United States.
Emergency 911 will begin more precisely pinpointing the location of callers beginning Oct. 1 this year under Federal Communications Commission rules. Full-blown commercial mobile location services are at least a year away.
Privacy experts say the location technology is troubling if it is there for all calls. "I think we're off to a good start with (the opt-in approach)," said David Sobel, general counsel for the Electronic Privacy Information Centre.
Some want formal rules
The CTIA has a petition before the Federal Communications Commission seeking rules to safeguard personal privacy with mobile phones, though it has not been wholly embraced by all the group's members.
AT&T, Verizon Wireless and Sprint PCS have told the FCC it is premature to adopt rules governing location privacy practices but if the agency decided to move ahead, the rules should treat hand-held computers with wireless connections in the same way a mobile phones.
CTIA's petition, if ultimately turned into formal rules, would require wireless companies to notify customers about its data collection methods and obtain consent before allowing that information to be used.
"It's not yet clear whether the FCC will accept the invitation to start a proceeding" that could lead to a required opt-in provision, Sobel told a recent forum on location technology. "Rules ultimately established must put the user in control."
But the Direct Marketing Association has urged the FCC to allow the industry to regulate itself on privacy and warned that past attempts by the agency to require an opt-in provision for customer consent was ruled unconstitutional.
"Our view is that it's still very early where the applications are, therefore to try to set regulations might kill some applications we may want," said Jerry Cerasale, senior vice president for government affairs for the marketing group.
