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New York City Nixes Advertising ‘Beacons’ in Telephone Booths

Image: People walk by empty public pay phone bo

People walk by empty public pay phone booths in New York, April 09, 2012. New York City officials plan to unveil new smart-phone booth next month, equipped with 32-inch (81-cm) touch screen and Internet connections, inside 250 old phone booths throughout the city. EMMANUEL DUNAND / AFP/Getty Images

Hundreds of "beacons" installed on phone booths in New York City that could be used to send targeted ads to pedestrians' smartphones based on their location will be removed, the city said.

The beacons were installed in around 500 phone booths by advertising company Titan. In response to privacy concerns raised by a BuzzFeed News story published early Monday morning, the office of New York City Mayor Bill de Blasio has decided to remove the beacons.

"While the beacons Titan installed in some of its phones for testing purposes are incapable of receiving or collecting any personally identifiable information, we have asked Titan to remove them from their phones," the mayor's office said in a statement. "The beacons will be removed over the coming days."

What exactly is a beacon?

Beacons don't actually collect or send any information. Instead, they ping out Bluetooth signals, which are received by phones that have downloaded and given permission to specific apps.

At that point, the phone sends out a signal saying that an app is located near a specific location. From there, it's up to the individual apps to determine what data is collected and how it's used.

If the New York City program had been allowed to continue, people would have had to install an app powered by Gimbal -- the company that made the beacons -- opt into sharing their location, and keep their Bluetooth enabled in order to receive location-based notifications, the beacon-maker said.

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The overall concept is not that different from Uber or Foursquare using GPS or Wi-Fi to pinpoint your location, said Rocco Fabiano, CEO of Gimbal.

"This is essentially the next step in the evolution of a technology that allows apps to be a little more precise," he said. He said that Gimbal does not send any information that could personally identify the user.

Fabiano's company isn't the only one in the game. Apple's iBeacon is already being used across the country.

American Eagle has installed iBeacon transmitters in 100 of its retail locations. A customer who installs the shopBeacon app gets push notifications once they walk into a store, which can include greetings, sale items and personalized shopping recommendations.

Twenty Major League Baseball teams are also using iBeacon to deliver possible seat upgrades, concession discounts and tips on the fastest exits out of the stadium fans.

Potential privacy problems

"Who knows what this information is going to be used for?" Bradley Shear, an attorney who specializes in digital privacy issues, told NBC News.

"Some mobile apps have privacy policies, some don't," he said. "Some collect more information than they say they will."

It's not clear how companies would combine that precise location data with other personal information gathered online, he said, and databases could potentially be accessed by government agencies like the NSA or hackers.

That might be true, Fabiano said, but the same could be said for any location-based technology.

"We think it’s ironic that we are being criticized for this privacy issue," Fabiano said. "If this was being done with Wi-Fi access points, it would be done without the consumer even knowing about it, let alone them being able to opt into it."

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Titan issued a statement saying it was only testing how the technology would work in dense, urban environments, and backed Gimbal's product.

"Gimbal proximity beacons do not collect user data/information, they do not send or push content, nor do they track people," the company said.

Regardless of how beacons are used, Shear said, the public should have been notified before it was installed on public streets.

"Why wasn’t the community informed first?" he said. "If this is allowed to happen in New York without everyone understanding what the potential consequences are, it's going to happen in other areas too."