Companies that sell advertising space on their third-generation (3G) mobile telephone networks could find themselves in breach of European law.

The UK Data Protection Commission (DPC) has warned that third-party advertisements sent to mobile handsets are potentially illegal.

The warning is a blow to operators planning to offer location-based marketing to open up a lucrative revenue channel and recoup their outlay on 3G licences. This kind of marketing involves sending advertising SMS (short message system) messages to handsets based on their proximity to retail outlets.

But the DPC has warned that rules introduced by the government implementing a European directive could bar this kind of third-party advertising. The ban would apply even if mobile companies had the user's permission to advertise.

Phil Jones, assistant data protection commissioner, said: "The Telecommunications Data Protection and Privacy Regulations 1999 expressly restrict carriers' use of identification data, such as individual mobile phone numbers."

Numbers can only be used to market the services of the operator that the customer subscribes to, and then only with consent. If an operator allowed McDonalds to send a text message telling customers that burgers were half price, it would be in breach of the regulations.

The second point concerns interpretations of technology. The regulations forbid unsolicited marketing calls. "The contentious point is the word 'calls'," said Jones.

"Some people argue that SMS text messaging falls outside the definition, but the DPC believes the regulations are designed to combat a particular mischief, regardless of the precise medium used."

A representative for the Department of Trade and Industry confirmed that there is a potential problem. However, he added that a draft telecoms directive adopted in July, due to be discussed at a summit in Portugal next year, should resolve the issue.

Jones added that the DPC would be "relaxed" about dropping the restriction, provided rules about gaining consent remained a key part of the regulations.

Five operators, including Vodafone Airtouch and Orange, collectively paid the government £22.5bn for licences to develop 3G services.

First published In Network News

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