Wireless Services Hit Snags

Location-based advertisers for wireless devices must rethink strategies to spur customer adoption.

Big brother is proving to be a tough sell. While location-based advertising services for wireless devices have a great deal of potential, the pesky little fact that customers value their privacy could slow adoption of the technology.

The Federal Trade Commission last week held a conference here with wireless industry leaders to hash out the issues.

"Developing wireless technology shows many indications of repeating two privacy disasters of the wired Internet: spam and nonconsensual tracking," said Jason Catlett, a privacy advocate and president of Junkbusters Corp., in Green Brook, N.J. "These intrusions may strongly deter consumers from adopting the technology, and some of the stakeholders are acutely aware of this potential tragedy and are seeking to avert it."

The hope of the industry is that customers will be so enthralled with the idea of services tailored to their location that they wont mind being tracked. But at the FTC conference, attendees reported that too many companies plans revolve around the idea of pushing unsolicited information to a customers device—for example, theoretically the phone would ring with a coupon for chicken fingers when the customer gets within 100 feet of a restaurant.

"If the business model for location is lattes and pizza, then we havent gotten there yet," said Greg Miller, vice president of corporate development and chief privacy officer at MEconomy Inc., in San Francisco.

Even executives at wireless services companies are turned off by this idea. "It would be irritating to have your phone ring with a pizza coupon," said Ronjon Nag, CEO of Cellmania Inc., of Mountain View, Calif., which develops wireless portals and is in partnership discussions with more than 20 carriers. Cellmania last week introduced a wireless business-to-business platform, mEnterprise, which supports location tracking.

Advertising agencies report that location-based marketing is still nascent at best but echo the simple sentiment of the FTC conference that customers need to feel protected. "The ability to track customers geographic location is bound to raise concerns," said David Rowe, senior vice president and media director of Euro RSCG/DSW Partners, a Salt Lake City ad agency.

The Federal Communications Commission has general rules about protecting the privacy of wireless phone customers. Provisions regarding customer proprietary network information discuss customer consent issues for carriers.

But with the wireless devices and services sprouting up daily, there will be several companies offering location-based services that do not fall under the category of telecommunications carrier and, therefore, do not fall under those rules.

For now, wireless service providers looking to take advantage of location technology must be governed by common sense. "Companies recognize that a consumer wont use a service that he cant trust," said John Jimison, executive director of the Wireless Location Industry Association, in Washington.