The Tightrope of Trust

FCC TACKLES location-based privacy

Stakes are high in the development of wireless technology in the United States. Wireless telecom carriers are rapidly developing location-based services that will pinpoint consumers' locations with Global Positioning Service (GPS) technology and market products to them based on their proximity to retail outlets. However, wireless providers and marketers need to gain and maintain mobile users' trust or face strict government regulation and loss of potential revenue sources.

Travis Larsen of the Cellular Telecommunication and Internet Association (CTIA) said, "We've watched the Internet very closely and the wireless industry decided that we needed to take a different approach. We laid out privacy principles before the technology even existed and submitted them to the Federal Communications Commission (FCC) in October 2000."

David L. Sobel, general counsel of the Electronic Privacy Information Center observed that "Congress said that the provider would have to obtain prior express authorization of the user before disclosing information. Now we have to figure out what that means."

"To its credit, CTIA at least has asked for some FCC involvement," Sobel admitted. "But I think we'll get a better sense of the industry's position as the FCC proceedings get underway." Sobel would like to see privacy rules that put the user in control. The FCC is currently reviewing CTIA's proposal.

According to Jacob Christfort, vice president and CTO of OracleMobile, "Too much regulation up front could thwart the business value of this technology. Many users want to get the services and reveal where they are." Christfort believes users should have control over their location information. (See www.intelligententerprise.com/010613/news1.jhtml for the full interview.)

The FCC's Enhanced 911 (E911) rules require that carriers' systems have the ability to find a 911 caller's location within a 125-meter radius by October 2001. But many in the industry concede that some carriers won't meet this deadline.

However, once a carrier is E911-ready, a host of companies are waiting to provide platforms for a variety of location-based services. BeVocal Inc.'s open development platform delivers personalized information to any device. SignalSoft Corp.'s BFound software lets mobile users reveal their location to subscriber-approved co-workers, friends, or family members. OracleMobile's platform supports location-based services as well.

In the meantime, the industry must maintain a delicate balance between self-regulation and FCC involvement on the tightrope of consumer trust.

Microsoft may be touting its "HailStorm" technology mainly as a boon for Internet consumers, but don't be surprised when the software giant tries to stake a claim with it in the business market as well.

HailStorm is a set of applications - still under development - that would ultimately give Internet users control over which people, businesses, and technologies have access to their personal information. It was unveiled in March as part of Microsoft's .NET initiative, an effort to turn its software into Web-based services that can be accessed on different devices. Microsoft plans to charge a monthly fee for HailStorm when it is released in late 2002.

Microsoft also intends to sell HailStorm to companies offering consumer and B2B services on the Web. In order for consumers to get the most use out of it, the technology has to be in place at the companies they patronize. So far American Express Co., Click Commerce Inc., eBay Inc., Expedia Inc., and Groove Networks Inc. have prototypes of the service with conceptual demos.

Ruthann Lorentzen, general manager of marketing and business development for .NET services at Microsoft, said the company will be pitching the idea to businesses such as FedEx Corp. and Ticketmaster. Companies would pay a flat fee ranging from $5,000 to $10,000. For higher service levels, Microsoft is still determining how much to charge.

As part of .NET, HailStorm could get more small and midsize businesses into the electronic trading game, according to AMR Research analysts Bob Parker and Randy Weston. To date, most of these businesses have resisted the use of exchanges and marketplaces for e-commerce transactions. However, because Microsoft already owns the desktop software market and has its Outlook email program installed on nearly every corporate user's computer, the company could market HailStorm as an inexpensive way to develop an Internet exchange.

Microsoft also plans to market HailStorm as an internal collaboration tool for both large and small businesses, Lorentzen said. For small businesses, the service would be sold as a component of Microsoft's bCentral Web site.

Industry analysts think HailStorm would be more attractive to small businesses.

"Personal information is as appropriate for a small business as for an individual," said Rob Enderle, research fellow at Giga Information Group. "Large corporations can keep data secure themselves and generally prefer to do it themselves."

Charles King, senior analyst at Zona Research, said the attractiveness to businesses is still unclear, since Microsoft's plans are not fully developed. However, there would be benefits for individual office workers using HailStorm.

"The explicit risk of the .NET initiative is that most people and businesses are used to having that box of CDs on the shelf that they paid for," King said. "The notion of switching over to applications and security via the Internet is a big jump."

Amber Howle

Amber Howle (amberstar@earthlink.net) is a freelance technology and business writer.