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Carphone Warehouse has become the first of the three UK ISPs who have agreed to pimp data to ad targeting outfit Phorm to announce a major rethink of how it will use the technology.

Company representatives have told users in forums that they are working on a way to ensure that traffic from people who opt out will never enter the Phorm system. "We had a meeting yesterday and based on customer opinion we decided to use a different method, yet to be decided, to split the traffic so it doesn't hit a Webwise server at all for those that opt out," one wrote.

In an email to a customer seen by The Register, Carphone Warehouse CEO Charles Dunstone confirmed that Webwise will be opt-in only on his firm's network. He wrote: "We have never stated what our policy was. This is the first clarification given. We are still many months before the system is meant to go live."

A post from TalkTalk admin "Matt" here adds more details. He writes: "There is no Phorm equipment in our network. We have never run any trials, nor implemented any aspect of this nor any of Phorm's previous systems in our network.

"By making the service opt-in, we feel the onus remains firmly with Phorm to make the service useful and compelling enough that subscribers will choose to join it. If it fails to do this, it will itself fail."

BT's pages on Webwise originally indicated it planned to opt customers in by default, and Phorm had planned that opted-out traffic would be mirrored to the profiler, but ignored.

A question in the BT FAQ asked: "I didn't switch on this service. Why do I have to switch it off?" The response was: "We believe BT Webwise is an important improvement to your online experience - giving you better protection against online fraud and giving you more relevant advertising. We realise that you may not want to use the free service, so we've made it quick and easy to switch on and off."

That question and response has now been deleted from the page here. A spokesman for the national telco said: "People were confusing the general operation of Webwise with the trial, which will be opt-in." BT is beginning a trial of Phorm's ad targeting technology with 10,000 consumers this month, under a changed privacy policy.

He added that the way the final deployment would deal with opted-out customers had not been decided. BT is still "looking into" what happened last summer when BT Business customers noticed suspicious redirects to a domain owned by Phorm.

Virgin Media has not given any details of how it plans to incorporate Phorm's system into its network, only saying that it is "some way off".

The row in the UK over the rise of Phorm has been noticed by US privacy advocates. Ari Schwartz, chief operating officer of the Centre for Democracy and Technology (CDT), got in touch with The Register to express concern over some of Phorm's recent public statements.

Back in 2005, when Phorm operated under the 121Media banner, CDT filed a complaint (pdf) with the Federal Trade Commisssion over distribution of what it considered spyware. 121Media later withdrew its rootkit software when it rebranded as Phorm, but in an interview last week, Phorm CEO Kent Ertegrul said: "We [121Media] got into the adware business - as opposed to the spyware business." Phorm now claims to be in advanced discussions with major US ISPs and is "very optimistic" about the outcome.

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