November 8, 2000 4:00 AM PST

Geographic tracking raises opportunities, fears

New technology that can pinpoint the physical location of Web surfers is creating opportunities for online merchants and advertisers but could signal new restrictions on the free-wheeling Internet.

So-called geotracking techniques that trace Internet Protocol (IP) addresses, which are used to route signals over the Web to an individual's computer, can help Web sites and advertisers target audiences in different geographic regions. For example, a traditional retailer such as Banana Republic could hawk swimming suits to Web visitors from Los Angeles as it pushes parkas to online shoppers from New York.

But if this technology


Meta Group says Quova's geotracking technique is not nearly as valuable as profile information, which most people will happily give up in return for very little.

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offers greater efficiencies and new opportunities for online businesses, bringing physical boundaries into the largely borderless world of cyberspace raises several delicate questions. Net users worried about online privacy may balk at technology that might one day reveal their street addresses to marketers. But for governments watching their sovereignty erode online, the chance to erect virtual walls may be too tempting to pass up.

"If it does become technically feasible to limit access by country, than it does seem to take away from the global reach of the Internet," said Andrew Shen, a policy analyst at the Electronic Privacy Information Center, a privacy research group.

Quova, a San Francisco-based Web marketing company, has developed technology to blur these lines.

The company set out in January to scan the Net's 4.2 billion IP addresses. The data-gathering project netted Quova a detailed physical map of the Internet. It is using the information to launch a new service later this year, dubbed GeoPoint, which the company says will target advertising to online audiences based on location.

"In the offline world, geography is so pervasive; depending on what area you're in, it determines what products you'll sell. Yet in the online world there's no element of geography," said Rajat Bhargava, founder of Quova, which is backed by Softbank and IDG Ventures.

With GeoPoint, Quova joins a growing number of Net advertisers that hope to tempt marketers with the promise of pinpointing customers who live or work within a particular country, state, city and even ZIP code.

Privacy advocates are looking at the ability of companies such as Quova to trace a Net user to a physical location. Beyond privacy, however, geotracking raises significant regulatory questions for online commerce, taxation, legal jurisdiction, online broadcasting rights and a host of other policy issues that have traditionally depended on borders.

Geotracking technologies have largely flown below the radar of regulators, but they are beginning to draw notice. For example, a technology panel next week is expected to issue a report to a French court saying techniques are available for stopping a large percentage of Net users in France from using a Yahoo auction site in the United States. Yahoo has argued that blocking French customers from viewing Nazi paraphernalia banned in that country was not feasible on the Web.

"Yahoo is basically saying they can't block French visitors from their site. But as Quova (and others) show, the majority of the time, you can block information coming from geographical areas," said Richard Smith, chief technology officer at the Privacy Foundation.

"Geographic blocking is sort of inevitable...for such instances as blocking online casinos and political messages in China. How prevalent it will be is the question."

Geotracking takes off
Started late last year, Quova operated for the first nine months of this year as a "stealth-mode, Internet infrastructure company," a tagline that raised hairs among security types. In mid-September, the company launched a beta version of its software. The technology lets companies know where Web visitors originate, down to their city, so that they can target advertising, customize Web pages, and deliver digital media to certain geographic locations.

How IP addresses are assigned

Past: Before the Internet was commercialized, IP addresses were parceled out unsystematically. For example, the address block beginning with the number 192 was broken up and distributed all over the world. Network administrators refer to this block as "the swamp" because of the resulting routing complexity. It was allocated in May 1993. Tracing these older addresses can be difficult.

Present: The Internet Assigned Numbers Authority allocates blocks of IP address space to three regional Internet registries--ARIN (covering North and South America), RIPE NCC (covering Europe) and APNIC (covering the Pacific Rim). These groups allocate blocks of IP address space to local Internet registries, which assign the addresses to companies such as Internet service providers. ISPs parcel out addresses to customers based on several factors, including geography, to aid overall network efficiency. Tracing many of these addresses is relatively easy.

Future: Internet engineers are preparing to overhaul the existing system of 4.2 billion IP addresses, known as IPv4, with a new, bigger system, dubbed IPv6. While implementation is likely years away, the switch could include a highly organized IP address allocation system based on location. Tracing IP addresses in such a system could be made trivial.

A slew of businesses have emerged to offer similar services. Digital Island and Digital Envoy specialize in location targeting; DoubleClick, Engage and 24/7 Media offer targeted local advertising to its customers.

Last month, Microsoft licensed technology, dubbed TraceWare, from Digital Island to manage the distribution of digital content nationally and internationally.

"What we do is make things easier on the Internet," said Sanjay Parekh, chief executive of Digital Envoy, based in Duluth, Ga. "Our technology is a dumbed-down version of caller ID--I know where you are, but I can't call you back...Technically it would be difficult to tie a person's IP address to their home address, and that's not something we're going after."

Akamai Technologies has had a rudimentary geolocation service in operation since this summer, guaranteeing an accuracy rate of about 98 percent in determining the country or U.S. state where a given Web surfer is located.

The company declined to comment directly on France's order to Yahoo, one of Akamai's longstanding customers. But vice president of product management John Shumway said the company's service could help a content provider block surfers in a specific country from reaching a particular Web service.

Akamai is moving ahead with a plan to ratchet up that location service another notch. It is working with some of its Internet service provider partners and using its own sprawling network of servers to develop the ability to narrow a surfer's location to the level of metropolitan area, for example.

The company is aware that it risks skirting the boundaries of privacy protections but says it is confident that it is still well on the side of protecting individuals' information. Allowing advertisers or Web companies to streamline their sites for local content could help consumers as well as the companies themselves, as long as the information exchange stays on a fairly unspecific level, Shumway said.

"It's a very difficult issue with geolocation, figuring out what is proper and what in the long run might represent some threat to privacy," he said. "But targeting (on a city level) isn't necessarily a bad thing, any more than it's a bad thing to pick up a newspaper and see a local ad."

Can it work?
Such questions point to another big piece of the puzzle for locator companies, which face an uphill climb in creating the sales forces needed to sell local advertising online. Because there are countless businesses on the local level, the sales staff needed to reach them all would outweigh any benefits reaped from targeted advertising.

Local ad spending online is expected to reach $2.7 billion by 2003, taking up $1 in every $4 spent, according to Jupiter Media Metrix, but it won't go up significantly after that.

"It's going to be a hard sell--it's difficult to sell to local advertisers online because they don't get it. And it's hard to sell to national advertisers because there's so much waste," said Marissa Gluck, advertising analyst for Jupiter Media Metrix, a New York-based research company.

Beyond the commercial promise of selling local ads globally, geotracking could provide regulators with a tempting solution to the Net's borderless architecture.

"Regulators are going to try to (implement) this," said William Cheswick, a former researcher with Bell Labs who has worked extensively on Internet mapping projects. "They have an enormous motivation to do it."

Companies such as Akamai and Quova can help create barriers on the Web for companies doing business internationally or nationally. Insurance and financial services companies, for example, face different laws and regulations by state and country. The Internet compounds these problems by opening access to anyone with a computer despite their homeland.

"This technology will help them comply with some of these regulations. But it will be up to the courts to decide what level of accuracy they need," Quova's Bhargava said.

Some already are putting that theory to the test.

Conflict abroad
One of the most prominent cases of geographic tangles was this year's crash and burn of iCraveTV.com, a Canadian company that had hoped to offer a streaming version of broadcast TV on its Web site.

The problem was, iCraveTV didn't ask permission from the TV companies whose content it was using. Its Web site ostensibly barred Americans from watching the streams, which included several U.S. TV stations. But the only real barrier was a page asking for a Canadian area code, which served as a password to the entire site.

Partly because broadcasters license content and sell advertising on a regional basis, this infuriated media companies on both sides of the border. A broad coalition of media companies sued iCraveTV, which backed down. Since that time, the company has been working on a way to determine a viewer's location and block U.S. residents from watching Canadian programming.

Whether geotracking can meet the needs of regulators, however, depends on several factors, including winning international cooperation on assigning IP addresses in a systematic fashion. In addition, serious questions remain about how accurate geotracking is and if it can meet the demands of regulators and the courts.

Technically, Quova gathers infrastructure-level information from several public-domain sources without looking at such electronic data as email addresses and cookies, or digital tracking tags.

"Basically we've collected traceroute and pings to tell us how traffic is moving, where traffic is coming from, where it's going to, what its performance is," Bhargava said.

By analyzing the data, the company knows the city location of all IP addresses, or a designated market area, based on Nielsen/NetRatings standards. Quova wants to target anonymously based on ZIP codes, and it is in talks with various companies about additional services.

There are some major holes in this approach, however.

For example, Quova and others do not have a good read on the location of subscribers at the world's largest ISP, America Online. The company, with 24 million members, poses a challenge because it uses a proxy-serve network that only shows IP addresses traveling from its home base in Virginia. For AOL, GeoPoint can only identify a person by country, with up to 98 percent accuracy, Bhargava said.

Locator technology is only 60 percent to 70 percent accurate, according to research from Jupiter Media Metrix. These estimates are based on the large number of IP addresses used by AOL. And as the number of AOL customers grows, the accuracy rate will shrink.

Elsewhere around the world, AOL doesn't operate proxy-serve networks, Bhargava said, so the opportunity to determine where Web visitors originate from is better.

Former Bell Labs researcher Cheswick said geotracking technology may be accurate enough for advertising purposes, but it doesn't come close to the level required for legal applications such as the Yahoo case.

"On the surface, this sort of looks like it works," Cheswick said. "But it gets dicey when you try to break it down to a city or even if you break it down to a single country...For advertising or marketing purposes, 80 to 85 percent accuracy is fine. But when it come to the courts, you want to have a higher standard."

News.com's John Borland and Evan Hansen contributed to this report.

 

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