Wireless location technology poses threats to all parties

During a recent trip to Germany, I naively thought of myself as a simple traveller and sightseer. But each swipe of my credit card left a digital footprint along my journey, which one major credit card company termed an “unpredictable pattern” – especially when I used their card three times on the same day in Munich. Concerned about fraud, the company refused to honour the card the next day in Berlin. Anxious phone messages and a written letter from the card’s security department awaited me upon my return to Canada.

So now imagine being equipped with a WAP-enabled cell phone equipped with new locating technology pioneered by Calgary-based Cell-Loc Inc. Such a device is heralded as a potential enabler of the brave new world of mobile e-commerce. Like a surgically-implanted microchip in a pet dog, such technology would have instantly enabled the credit card company to find me right away and to verify my identity, thereby avoiding worry and inconvenience.

Wireless location technology will move from the abstract into the reality of every day life this October when a decree by the U.S. Federal Communications Commission takes effect and requires all wireless carriers to be able to identify the location of anyone calling an emergency number.

Service providers, such as Telus Mobility, are already preparing the way by offering their wireless Internet users the ability to personalize their screen content and format preferences. Once registered, customers select the type of content they want to view and will soon be able to receive real-time traffic, stock, weather, news and sports alerts.

Marketers are also exploring plans to use the same technologies to alert cell phone users of the nearest HMV record store or McDonald’s outlet.

The implications for individual privacy are enormous.

Location technology, coupled with powerful marketing databases and communications networks, opens users to an unprecedented scale of potentially abusive intrusions, 24×7. And not only unwanted responses from annoying telemarketers delivering unsolicited pitches anytime, anywhere.

Knowledge of your whereabouts will enable a variety of inferences to be made about any and all of your so-called “unpredictable” patterns – and for that knowledge to be shared by credit bureaus, insurers, marketers and employers, among others. That information will also be married with new on-line profiling databases such as Customer Profile Exchange, spearheaded by giant IBM Corp. and backed by more than 90 companies, which has developed more sophisticated statistical tools to observe your Web behaviour.

Targeted ads and pitches is only the thin edge of this wedge. Consider the prospect of price-fixing raised by the strategy of dynamic pricing, which gauges a shopper’s desire and financial means to set prices accordingly. On-line book seller Amazon.com was recently caught selling the same DVD movies to different customers at different prices.

The Amazon.com example shows that much more than privacy is at stake with the proper use of new digital locating and marketing technologies. Injudicious use of this technology stands to imperil consumer trust in digital networks.

Nuclear strategists long ago realized that there are not two atoms – one peaceful and one militaristic. Rather, all nuclear energy relies on the same atom, regardless of purpose. Digital telecommunications networks are no different than nuclear weapons in that regard. It is the use to which that technology is applied that gives it either a beneficial or malignant purpose.

Some enlightened regulators appear to recognize both that notion and that a free market may be incapable of recognizing the philosophic interest of privacy protection is also in its self-interest.

In Canada, the recently-enacted Personal Information Protection and Electronic Documents Act (nicknamed PIPED) was adopted to secure on-line privacy and will apply to all businesses by 2004. In Great Britain, officials have drafted rules for the use of location techniques over employee handsets. A draft European Union directive is also seeking to ban location data processing without a person’s permission.

It is time for users and service providers to share a similar view of the implications of digital technology and to jealously guard customer privacy rights – or risk losing consumer trust.

Lawrence Surtees is the senior research analyst for telecom at IDC Canada Ltd. in Toronto. He may be reached at lsurtees@idccanada.com