Telefónica wants to turn customer data into cash
Mobile phone group Telefónica wants to make greater use of customers' personal data for commercial purposes. In early October, it established a new London-based Telefónica Dynamic Insights unit to process and analyse this information. Processed data will be offered to other companies and the public sector for market research and trend tracking purposes.
The new unit has announced that its first product, which it calls 'Smart Steps', will link anonymised customer details such as age and gender with traffic data, such as details of daily movements. This will, for example, enable retailers to determine how long particular target groups stop in front of their shop windows. According to Telefónica, all customer data passed on to third parties will be anonymised. The press release states that the product will be operated in partnership with market research organisation GfK.
According to a report on Germany's Tageschau news site, Smart Steps will initially be available in the UK, but is later to be expanded to other markets as well. The report states that a Smart Steps prototype is already available and talks are underway with interested businesses in Germany. Telefónica has yet to give a launch date for the product. The company is also stressing that it will adhere to data protection regulations.
Officials are, however, likely to take a critical view of customer data being commercialised in this way. Thilo Weichert, Data Protection Commissioner for the German federal state of Schleswig-Holstein, told Tagesschau, "Location data is highly sensitive because it allows a person's precise location to be determined. I am therefore very uncomfortable with the idea that telecommunications companies are now starting to make this data publicly available."
Mobile phone operator O2 Germany, a Telefónica subsidiary, already obtains customer consent for this kind of usage. If a user signs up for a mobile phone contract online, they have to agree to small print which includes a stipulation that their personal and location data can be used "to the extent required" for "marketing" and "market research". Customers do, however, have the option of writing to O2 to say that they do not want their data to be used in this way.