BT pull out of Phorm

[James Firth]

Ian Batten wrote:
> Quite so.  The most that a large company would sign with a startup
> would be ``we'll look at your product.  You won't sell it to other
> people without our agreement, and we won't talk to your competitors
> without your agreement, for a period of X months''.   But even then,
> it's hard to see why they'd bother: BT didn't have exclusivity ---
> Virgin and CPW was being courted as well --- so why would BT commit to
> anything?  What possible power did Phorm have to get BT to do anything
> beyond signing an NDA?

Don't forget this was less a story of "buy our product" and more a story of
"work with us to build this fantastic money press".

The whole process needed capital and Phorm could have argued to the ISPs
that they needed the exclusivity in order to get the markets to fund the
"fine tuning" of the envisaged money press.

Also in this instance BT perhaps would be comforted by its rivals joining in
the venture, hopefully de-risking the privacy/customer backlash.

Further note on the BT statement to the BBC:
http://news.bbc.co.uk/1/hi/technology/8135850.stm
"It's more a case that we have other stuff to work on - Project Canvas,
rolling out the fibre network and so forth - so we've taken a step out of
Phorm and will see how it develops.

"[Our decision has] nothing to do with cost or privacy, it's about resources
and priority," he added.

Resources in this case could involve rack space and power/cooling
requirements in the colocations. For BT it could simply be hard tangible
economics (rather than the intangible tangle of privacy and the unfathomable
British intercept laws).

A simple calculation they can earn X amount from allowing Phorm to use the
rack space or X*N for a.n.other "value added service"

James Firth