There's Gold in 'Reality Mining'

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Over time, all that data shows useful patterns. "We can build a model for major sporting events that shows what happens if you build the stadium in one place or another," Inrix CEO Mistele says. "We've found that in most cities the biggest determining factor in traffic is school schedules. In other cases, like Washington, D.C., the legislative calendar is very important. We can correlate our data to practically any other variable."

Other business implications of reality mining are legion. Nathan Eagle is a research scientist at the MIT Design Laboratory who works with Pentland. Eagle is currently working with a database that holds an entire month's worth calling data for a whole European country, though he won't say which one. Scrubbed of all information that might be used to identify people, the data set contains information on 250 million phones and some 12 billion phone calls.

Wireless companies could use the information to help keep customers from switching to a rival—a strategic must in a region where most of the population already has a cell phone and "new" customers are scarce. Eagle mines the data for a range of information, such as identifying so-called influencers, who use their phone the most. Not only are these subscribers valuable because they use their phone a lot, but they're also more likely to influence other people's service and product purchases—and to take customers with them when they switch. "If someone who makes a lot of calls walks away, there's a higher potential that they'll take more people along with them," Eagle says. His research is funded in part by Nokia (NOK).

Privacy Objections

Conference organizers are turning to reality mining to ensure events come off without a hitch. One aim of meetings is to ensure participants interact with people from disparate backgrounds, and a planner can use radio-enabled tags to know whether that's happening. "Very often your first inclination at something like this is to hang out with someone you know or who you came with," says Rick Borovoy, founder of nTAG Interactive, a company spun out from MIT in 2002 that specializes in what it calls event data management. "We try to intervene and change that by collecting data on how people are interacting." If people aren't mingling enough, conference organizers can offer incentives—say, a door prize—for whoever circulates the most. Customers include Hewlett-Packard (HPQ), General Electric (GE), Siemens (SI), IBM (IBM), and AT&T (T). "Our customers spend a lot of money on these events, and they want to know whether or not they're effective," Borovoy says.

If all this movement-tracking sounds invasive, that's because it is, privacy advocates say. Guilherme Roschke, a staff attorney at the Electronic Privacy Information Center, or EPIC, in Washington, D.C., says that while reality mining may have some legitimate uses, it can also be abused. He's also concerned when people are monitored without their consent. "There is a lot of new information being collected, and it brings significant new capabilities, some of which are privacy-infringing," Roschke says. "The first thing is to let people know this data is being collected, and how it's going to be used. And whenever it's put to a new use, then it must be disclosed."

The way Eagle sees it, the data is being collected anyway, so why not put it to good use? "Right now practically the only use for it is for law enforcement to use it to investigate crimes and put people in jail," he says. "I just think it can be put to better use to deliver services that are interesting or that help people."

Hesseldahl is a reporter for BusinessWeek.com.