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Phorm: How it went down

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Analysis For a company without customers, users or revenues it's pretty extraordinary that Phorm achieved the dubious distinction of being the biggest UK technology story of the past 18 months.

It couldn't have done it on its own, of course. As it slinks away from the UK market this week, investors can thank BT executives, alongside the firm's own, as joint architects of its failure.

And a failure it now surely is. With closest partner BT effectively telling Phorm "you're on your own", and TalkTalk swearing off its agreement altogether, the firm is effectively finished in this country, at least for the forseeable future.

CEO Kent Ertugrul now faces the unenviable task of rebuilding the business overseas, starting in South Korea, where it is running trials of its web monitoring and profiling system with Korea Telecom. BT is left to reflect on what its former press chief described as "a year of the most intensive, personal-reputation-destroying PR trench warfare".

The energetic campaigners against Phorm have rightfully claimed their joint failure as a victory. To a facetious observer, the firm's assertion to investors that it is "extremely encouraged by the fact that BT has stated that privacy was not a factor in their decision making" is comical. We've long known privacy was not a factor in BT's decision-making over Phorm - that's how the pair ended up in the mess they did.

But the line collapses under even the most cursory scrutiny.

Perhaps Phorm is indeed "extremely encouraged" by BT's statement, but we suspect its investors are not. If, as implicitly claimed, BT believes Phorm has won its year and a half battle over the legal and ethical implications of its technology, then it must have drawn the conclusion that the business opportunity was simply not good enough. Any company extremely encouraged by such an assessment ought to lay off the happy pills.

Alternatively - and call us cynical - BT's claim that it was dropping Phorm simply to concentrate on next generation network rollout seems questionable.

The Phorm project was part of BT Retail's "value-added services" unit. Its director Emma Sanderson was fed to telly news when we broke the story of the secret trials last year (El Reg was repeatedly denied an interview at the time. The invite remains open...).

Network upgrades and the nationwide logistics involved are meanwhile the responsibility of BT Openreach. The idea that shutting down a relatively low capital, small project (the brunt of the costs were borne by Phorm, or its investors at least) will help a separate division of BT - one legally separate from the rest of the group on antitrust grounds - deliver a multibillion pound infrastructure upgrade is derisory.

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