Neuralitic compiles statistics to allow cellphone carriers to monitor traffic and better market services, says company partner Louis Brun.
If you've ever wondered if your wireless provider was keeping tabs on what you were doing with your smartphone, you're probably not alone.
Everything from the apps you're using to the ringtones you've downloaded creates a digital footprint, and Neuralitic Systems Inc. has developed a new market research system that allows mobile carriers to track their users -- and market their products accordingly --like never before.
"Mobile Internet traffic is increasing enormously," Audry Larocque, co-founder of Neuralitic, said in an interview. "But revenues are not increasing at the same rate. Our purpose is for operators to bridge that gap."
Founded in 2007, the small Montreal-based company has spent the past three years developing and refining its SevenFlow platform, which involves installing a computer that captures and filters through all of the data that flows between the operator's Internet servers and smart-phones on the network.
Through a series of algorithms, the platform compiles the data into aggregate statistics that will tell carriers which phones are the most popular for accessing the Internet, the top apps downloaded, the most popular websites, or even the time of day with the most traffic.
"It enables the operator to, from one system, retrieve all of the information already in the network," Louis Brun, Mr. Larocque's partner, said in an interview.
The idea is to help operators figure out better ways to sell their products, and it paid immediate dividends for Star-Hub, a telecommunications provider in Singapore.
After installing Neuralitic's platform into its mobile TV network last year, StarHub was able to figure out which of its phones, services and media channels were the most popular and market them to the public accordingly. After some changes to their brand positioning, StarHub saw its subscriber base jump 28% and average viewing time grow 16% within a month, Mr. Larocque said.
However, the pair refused to specify any other carriers that had installed their system, including whether any of the major Canadian carriers were involved.
"We're working with customers in Canada, but we can't say who," Mr. Larocque said, explaining that it was still too early in their business cycle to reveal their clients.
Overall in 2009, the company grew its presence from one country to 24 across North America, Europe and Asia, and increased revenue eight-fold. The pair expect their revenue to rise by 10 times in 2010, and to expand to 40 markets by 2012.
The company also snagged a $3-million investment from the BlackBerry Partners Fund, a venture-capital group that invests in mobile applications, last January. The fund is not directly connected to Research In Motion Ltd., although RIM is an investor.
"We felt they had the right combination of ingredients," said Marc Faucher, a Torontobased partner with the fund. "I had talked to a few companies but others had different solutions that were less elegant."
However, the idea of a cellphone provider being able to collect such sensitive information doesn't sit well with everyone.
"This raises lots of red flags," said Joe Compeau, a professor and privacy expert at the Richard Ivey School of Business in London, Ont. "What they're doing is taking advantage of the grey areas. Canadian privacy law is fairly robust, but it is a bit of a catchup game."
As long as the carriers are not keeping individual records of people and selling them to third parties, they are likely playing within the rules, he said. And there is certainly value in what they are doing.
"I can understand why they're doing it. It's great for wireless companies, they can price their services, see their volumes, see how consumers are reacting," he said.
For their part, Neuralitic's owners defend their business, arguing that it is up to the carrier to ensure all data collected from subscribers is done legitimately, and that the carrier operates the platform. However, Neuralitic will consult on how to best use the results.
Also the data, while stored for between three and six months on company servers, is only in aggregate form and cannot be traced.
"I've found saying 'aggregate' is the first line of defence with these companies, but it's not hard to go back a step," Mr. Compeau said.
He warned that consumers really should not be surprised if their carriers are looking over their shoulders.
"We give up a lot of privacy for convenience," he said. "People need to get their heads around the fact we just don't have much privacy."
Read more: http://www.financialpost.com/story.html?id=3091159&p=2#ixzz0pc5BXIWO
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