Telefónica's O2 to sell customer location data to retailers

Telefónica Digital is creating a new business to sell subscriber location data to organisations in the UK, Germany and Brazil. The new "Dynamic Insights" service aims to interpret, analyse and then sell the anonymous data of O2 customers to retailers and public sector organisations.

The company's first Dynamic Insights product is called "Smart Steps" and will launch in November. The service is designed to measure store traffic for retailers, Stephen Shurrock,  chief commercial officer at Telefónica Digital, told Reuters.

Shurrock said the aggregated customer data will enable retailers to see where certain age groups are shopping at a particular time of day, which could assist the shop owner to then tailor products, offer discounts and adjust staffing levels.

However, he stressed that retailers would not be able to identify phone users from the Smart Steps data.

"It's not about individual customers," he told Reuters, noting that some mobile data is currently used for services such as road traffic management. But advances in computer storage and data analytics meant the huge volumes of information collected--often known as Big Data--could now be mined more effectively than ever before.

To enable this level of data mining, Telefónica Digital said it is entering a global partnership with the Germany marketing research firm GfK, which will initially help develop Dynamic Insights.

 "We are constantly working to help our clients understand the impact of technology on changing consumer behaviour, and particularly the unique challenges and opportunities presented by mobile," said Gerhard Hausruckinger, COO of GfK's consumer choices sector. "Together with Telefónica we will develop a portfolio of market-leading products and services."

However, concerns have been raised over the privacy issues related to this new service. Google and Yahoo have been criticised for using anonymised customer data in their web targeted advertising business, according to Computerworld.

Telefónica, which has over 310 million customers worldwide, told BBC News: "There's no disclosure of personal information at all. This is not about analysing surfing behaviour; the anonymisation and aggregation process protects privacy," said a company spokesman.

A spokesman for the UK Information Commissioner's Office, which polices the Data Protection Act, told BBC: "So long as individual's personal information cannot be identified from this service, we don't have any problem with it."

Commenting on the planned launch, Ovum's telecoms strategy analyst Jeremy Green said that operator data was already being sold, referencing Vodafone's deal to sell network traffic data to navigation firm TomTom.

"This is a good and clever thing to do, and it fits in with an overall Telefónica strategy, which is to look for revenue streams other than just selling connectivity," he told Reuters.

In the United States Verizon Wireless recently formed a similar unit called Precision Marketing. Verizon has compiled data from its millions of customers and that data, which Verizon aggregates and makes anonymous, and the operator plans to sell that data to sports venues and others for marketing opportunities.

For more:
- see this Telefónica Digital release
- see this Reuters article
- see this Computerworld article
- see this BBC News article

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