Canada's privacy watchdog says that while talks are ongoing, it is not yet satisfied that Bell Canada will bring its targeted online advertising policy in line with privacy legislation.

The telecommunications giant said Tuesday it would change a policy that required cellphone customers to opt out of having their Internet browsing habits tracked as part of its "relevant ads program."

Earlier in the day, Canada's Office of the Privacy Commissioner (OPC) issued a report that denounced the practice and argued Bell should instead give users the chance to opt in to the program. While Bell agreed to other recommendations, it had declined to follow this one, the OPC said.

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Bell then said in an e-mailed statement it would comply with the OPC's decision, "including the opt-in approach," and thanked the commission for "clarifying the rules."

After meeting with representatives from the company on Wednesday, however, the OPC said the issue remains unresolved.

"While we cannot comment on the specifics of our discussion today, what I can tell you is that we are not yet in a position where we can confirm that our concerns have been satisfied," OPC spokeswoman Tobi Cohen said in an e-mail.

"Discussions to this end are continuing. We will maintain our option to pursue the matter at the Federal Court if a solution cannot be reached to our satisfaction," she continued, adding, "Suffice it to say that it would be premature to say that we have arrived at a solution on the issue of opt-in."

The federal watchdog does not have the power to order private companies to comply with privacy legislation, but said Tuesday it could take the issue to court, noting it hoped Bell would reconsider its position over the coming weeks.

Bell spokesman Mark Langton said Wednesday the company is "working co-operatively" with the OPC. "Bell is moving to the opt-in approach as confirmed yesterday," he said in an e-mail.

Mr. Langton added the company hopes to see the same rules – requiring opt-in consent to tracking browsing behaviour – apply to international companies such as Facebook and Google that compete for Canadian advertising dollars. However, he said this issue was not a sticking point in Bell's talks with the OPC.

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Bell's targeted ad program also faces an ongoing challenge at the Canadian Radio-television and Telecommunications Commission (CRTC).

(Bell is owned by BCE Inc., which also owns 15 per cent of The Globe and Mail.)

The company first announced the program in November, 2013, prompting the Public Public Interest Advocacy Centre and the Consumers' Association of Canada (PIAC-CAC) to file a challenge with the CRTC over privacy concerns.

Meanwhile, the OPC received a wave of complaints about the program that led it to open its own investigation, which it concluded and publicly reported on this week.

Bell uses the information it gains from tracking its cellphone customers' browsing habits and app use to deliver advertising for third parties aimed at what it believes to be users' specific interests. (The targeted ad program has only applied to wireless customers so far, but Bell has said it wants to expand the initiative to television, Internet and home phone customers in the future.)

This type of "behavioural advertising" has become common on the Internet and the OPC issued guidelines in 2011 to address privacy concerns it raises.

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The guidelines say advertisers must ensure people know they are being tracked, notify them before collecting personal information and give them the opportunity to opt out of being tracked.

However, the OPC determined in the case of Bell's program that an opt-out standard of consent was insufficient and that the company should instead offer users the chance to opt in from the outset. The OPC noted that Bell has access to user information it already collects in order to deliver telecom services.

"Bell is able to track every website its customers visit, every app they use, every TV show they watch and every call they make using Bell's network," the OPC said in a statement on the report.

"When that information is combined with account and demographic information – such as age range, gender, average revenue per user, preferred language and postal code – which the company has long collected, the end result is a rich multidimensional profile that most people are likely to consider highly sensitive."