3G phone ads could be illegal

Location-based phone advertising may break a European Telecommunications Directive

Advertising on mobile phones -- crucial for companies investing in mobile technology -- may be illegal, according to the Data Protection Commission Thursday.

Location-based advertising on broadband mobile phones would help telecommunications companies to recoup some of the billions they have spent on buying third generation (3G) mobile phone licences from the government.

The restriction regards third party advertising. Telecommunications companies are not forbidden to advertise their own services, but are restricted from carrying third party adverts.

The situation is likely to change next year, however, when a revised European Data Protection Directive is expected to come into force. The Department of Trade and Industry (DTI) expects this change to receive little opposition from the Data Protection Commission. "The Data Protection Commission Office is happy for any restrictions to be removed so long as users give their consent," says a spokesman.

"As long as users make an informed decision, we really don't mind," says a representative from the Data Protection Commission.

Telecommunications companies concede that location-based services are crucial to their strategy, but say that the customers will not be pushed into anything. "Customers will have to opt in to that service," says a spokeswoman from Vodafone. "It's not a big brother thing."

Although 3G will make greater use of location based services some phone companies are already starting to offer text messages information service based on where a customer is.

3G or UMTS (Universal Mobile Telecommunications System) phones, which are expected to debut early 2002, will mean greatly increased bandwidth and open the way for broadband Internet content on mobile devices.

Mobile advertising will be regulated by the new Wireless Marketing Association, which is developing standards for mobile advertising, if mobile companies give the new organisation their backing.

The massive amounts paid by telecom firms for 3G licences, which has left some heavily in debt, has cast doubts over the future of 3G. Analysts have suggested the massive expenditure could hamper their ability to invest in 3G networks, making them less attractive to consumers.

Location-based services, including advertising, are widely thought of as the key to recovering these costs.

Have your say instantly, and see what others have said. Click on the TalkBack button and go to the ZDNet News forum.

Let the editors know what you think in the Mailroom. And read what others have said.