Mobile phone companies have drawn up plans to monitor text messages and voice calls and pass the information to advertisers.

Companies such as Motorola have developed technology to scan messages for information about where customers are and what they are doing.

They claim that the service would be used only with customers’ consent. But privacy groups had deep concerns about the technology and the potential for phone companies to abuse it.

Under the Motorola plans, software would be installed on mobile phones to search for related words in text messages. If the words “hungry” and “food” were picked up, for example, an advertisement for a local restaurant could be sent to that user.

Kenneth Keller, Motorola’s chief marketing officer, said: “We have a technology which allows us to search, to understand not only where that person might be but also what their interests might be. You figure out if the person is going out for dinner or shopping and trying to find a particular retail outlet, for example.”

The technology is still under development and is currently based around searching text messages, but could also be applied to voice calls, Mr Keller said. Motorola has already started discussions with partners.

Mr Keller conceded that the service would have huge privacy issues in its application. But he said that it would probably be based on an “opt-in” model in which a consumer could sign up in return for cheaper calls.

Simon Davies, director of Privacy International, said: “We have deep concerns about this kind of technology. Phone companies may be talking about ‘opting in’ to such schemes and providing incentives to customers to sign up, but down the line it is more likely you will be penalised if you don’t sign up.”

The Information Commissioner’s Office, which aims to protect personal information, expressed its concerns. A spokesman said that any company scanning text messages and conversations for key words would have to consider their compliance with the Data Protection Act and other laws.

Consumers would have to be fully aware that scanning for the purpose of marketing would be taking place and they would have to consent to it.

“Individuals value their privacy,” the spokesman added.

Advertising via mobile phones has long been regarded as potentially profitable by phone and advertising companies. The appeal lies not only in the huge number of people who use mobile phones but also in the fact that advertisers could reach younger people who may be harder to reach via traditional media. Mobile phones also allow for better targeting of advertisements than traditional media.

Informa Telecoms and Media forecasts that the annual market for advertising on mobile phones will exceed $11 billion (£5.5 billion) by 2011.

Such services have only become viable with the creation of 3G phones with colour screens and fast internet connections. The phone companies have also held back in part because of fears that consumers might complain about intrusive “spam”.

Many phone companies claim that research shows that “opt-in” services — where customers agree to give up personal information and to receive advertisements in return for cheaper calls — will become more viable.

Three weeks ago, the first such service was introduced. Blyk offers customers free airtime minutes if they agree to receive advertisements on their handsets. To receive the service, Blyk customers must first give details of their spending habits and planned purchases on a website. Phone companies believe that the service could be combined with GPS technology — now a feature of many mobile phones — to allow them to identify where a user is and send them advertising.

The Data Protection Act restricts the use of personal data by mobile phone companies. They cannot pass on information to a third party without the consent of that person. But consumer groups fear that the law might not be able to keep up with the technology. Mr Davies said: “Most privacy regulations are about five years behind the technology development cycle.”

Nothing's secret

— In 2005, when cardinals met to elect the new Pope, the Vatican created an electromagnetic force field around them to scupper spies

— The 2003 trial of three men who organised the Real IRA’s bombing campaign in London and Birmingham in 2001 was told how one received a text message showing fizzing sticks of dynamite

— Ian Huntley was convicted of murder after signals from a phone belonging to one of the two girls he killed placed them at his house

— Anti-terror laws introduced last month allow about 700 public bodies and quangos access to mobile phone calls

Source: Times database

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