January 09, 2001, 1:25 PM — M-commerce services pose privacy risks
NEW-BREED MOBILE-commerce vendors, eager to send customers targeted ads and marketing offers based on the exact whereabouts of their cell phones, are tackling head-on some high-profile privacy concerns.
The ability to pinpoint the position of potential customers as they use their wireless phones is already a technical possibility, given systems developed for government emergencies and for 911 service.
But m-commerce application providers, wireless carriers, and government regulators are now working heatedly to address the privacy issues swirling around commercial use of ALI (automatic location identification) data.
Specifically, the Federal Trade Commission next week will hold a set of fact-finding discussions on m-commerce. Included on the FTC's agenda is a session on location-based services and privacy.
Scrambling to get out front on protecting their customers' privacy, m-commerce vendors themselves acknowledge that the specter of privacy infringement could stymie their fledgling industry.
"Any technology that threatens to be a tracking service without the knowledge or consent of the customer will turn concern into backlash," maintains Ken Arneson, CEO of Xypoint, in Seattle.
Xypoint is one of a few key vendors working with carriers to supply mandatory ALI data to the Federal Communication Commission for E911 (Enhanced 911).
But in limited trials, Xypoint, its partners, and a handful of other vendors are using ALI for commercial purposes. For now, they are doing so only with the express consent of a small number of wireless phone users.
Go2Systems, in Irvine, Calif., is one of a swarm of vendors eyeing the use of ALI data. The company inked a five-year deal this week with Coca-Cola to steer wireless customers to stores selling Coke products. "We deliver information based on location today, but you have to tell us where you are," said CEO Lee Hancock.
Not limited to retail applications, m-commerce vendors are also ready to pitch ALI-related applications to enterprises needing to transmit corporate data to an increasingly mobile workforce.
Before the industry can get to that point, however, privacy wrinkles must be ironed out, said a spokesman for the Cellular Telecommunications Industry Association (CTIA), in Washington.
"In the Internet industry there have been a lot of horror stories. We took a look at these and asked, 'What can we do as an industry to reassure consumers their privacy will be protected?' " the spokesman said.