Orange, the mobile and broadband operator, will said it will not use Phorm's targeted advertising technology for the moment because of concerns about protecting its customers' data, according to the Financial Times.
Phorm's technology tracks web surfing and targets advertising based on it, which it then shows to broadband customers who have opted to receive it.
Phorm claims that by positioning itself at the heart of broadband networks it can gather more data than other "cookies" from companies such as Google or Microsoft. They of course sit on the top of the networks and therefore do not have to share revenue with operators, who are desperate to find new sources of income as voice and broadband are commoditised.
Phorm's admission that it conducted trials on BT customers in 2006 and 2007 without their consent caused outcry from privacy campaigners and prompted questions from the European Commission, though the UK government has said Phorm does not break the law, the FT said.
Last month, BT began a trial of Phorm's technology, which it has branded "BT Webwise", with up to 10,000 volunteers. Virgin Media and Carphone Warehouse are also assessing Phorm's system; together the three ISPs have more than 70 per cent of UK broadband users.
Orange said it would survey customers about what data they were comfortable sharing with advertisers, what rewards they would like in return, and how they would opt in or out.