Your smartphone holds a treasure trove of information about you, and cell phone companies are looking for ways to turn that into profit.
Today, most of the data wireless carriers share with third parties is pretty generic: All four national carriers bundle together their customers' personal information and use that aggregated data to help outside companies target ads to their subscribers.
But cell phone companies are just scratching the surface of what they could be sharing. Smartphones know where you are now, where you've been, what you like to shop for, and what apps you use. Your phone company knows your age, race and sex.
Put all that together, and the carriers have some extremely relevant information for brands vying for your business.
"An interesting transformation is happening in wireless, in which consumers are no longer customers -- they're the product," said Dan Hays, principal in PricewaterhouseCooper's communications and technology practice. "The trick is for operators to find out how to make money without violating their relationships and trust with their users."
Here's how cell phone companies and third-party brands might use your data: When you're standing outside a store, your cell phone company could provide your location and age (without your name attached) to the retailer, which could instantly place an ad on your phone that's targeted to you. Or, based on who is walking down the street, a retailer could instantly change a digital sign to lure them in. If you have a shop's app installed on your phone, that store could send you a coupon when you're nearby.
Verizon (VZ) has already begun selling aggregated customers' location data to third parties. The carrier tracks broad categories of who passes by stores (age, race, sex) and gives that bundled information to the retailers. Those stores could then better advertise to the people that are most likely to buy their products, or they could set up shop in a part of town where their target demographic travels.
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But carriers are now gaining the ability to go a level deeper with the information they collect. Cisco (CSCO) last week unveiled Quantum, a new mobile monetization platform that enables real-time network analytics and actions.
Quantum, as well as some other solutions offered by IBM (IBM) and other companies, allow carriers to know what's going on in their networks at any given time and immediately act upon that information. In other words, ads and coupons are going to become hyperlocal and even more precisely targeted.
"Network operators sit on a goldmine of data," said Kelly Ahuja, general manager of Cisco's service provider mobility group. "We're going to help them capture and apply it."
Targeted mobile advertising could be an $8 billion market in 2016, according to Ahuja.
Yet all of this has the potential to be creepy and make users feel violated. That's something mobile operators are both aware and wary of.
"We can't be casual about privacy," said Abhi Ingle, head of AT&T's (T) ecosystem and innovation team. "If you go a level deeper than category-based analytics, there needs to be explicit permission given from the user."
Only about 5% of retailers currently have the interest or the ability to market to specific customers based on their location, according to Ingle. Most of what brands are interested in is more generalized information about their customers.
But in a rapidly evolving and increasingly mobile marketplace, the brands that arrive late to the location-based targeted advertising game may be left out in the cold.
