WASHINGTON - New rules that will soon require U.S. mobile phone companies to track their customers in an emergency will use technology that opens up a host of marketing opportunities, but also potential privacy headaches.

Marketers salivate when they think of sending targeted coupons and advertisements to mobile phones that are carried near shopping areas, for example. But the wireless phone companies, mindful that many customers despise telemarketers who bother them at home, are approaching the technology cautiously.

Companies like AT&T Wireless Group, among others, are developing an ``opt-in'' process that would allow marketing only where consumers give specific consent, a privacy protection policy that is unusual among major U.S. industries.

The ``opt-in'' stance of wireless companies is in stark contrast to the ``opt-out'' position of banks, which recently released a flood of mailings, which their customers must return to avoid their personal data being used to market products and services.

``The consumer will be the one who makes the decision,'' said Thomas Wheeler, head of the Cellular Telecommunications & Internet Association (CTIA), the main trade association for wireless companies.

While the financial rewards are tempting, the privacy nightmares are too large for the wireless industry to ride roughshod over consumers' concerns, experts said, resulting in the break with unfettered marketing in favor of privacy standards normally seen only outside the United States.

Emergency 911 will begin more precisely pinpointing the location of callers beginning Oct. 1 this year under Federal Communications Commission rules. Full-blown commercial mobile location services are at least a year away.

Privacy experts say the location technology is troubling if it is there for all calls. ``I think we're off to a good start with (the opt-in approach),'' said David Sobel, general counsel for the Electronic Privacy Information Center.

SOME WANT FORMAL RULES

The CTIA has a petition before the Federal Communications Commission seeking rules to safeguard personal privacy with mobile phones, though it has not been wholly embraced by all the group's members.

AT&T, Verizon Wireless (NYSE:VZ - news) (VOD.L) and Sprint PCS (NYSE:PCS - news) have told the FCC it is premature to adopt rules governing location privacy practices but if the agency decided to move ahead, the rules should treat hand-held computers with wireless connections in the same way a mobile phones.

CTIA's petition, if ultimately turned into formal rules, would require wireless companies to notify customers about its data collection methods and obtain consent before allowing that information to be used.

``It's not yet clear whether the FCC will accept the invitation to start a proceeding'' that could lead to a required opt-in provision, Sobel told a recent forum on location technology. ``Rules ultimately established must put the user in control.''

But the Direct Marketing Association has urged the FCC to allow the industry to regulate itself on privacy and warned that past attempts by the agency to require an opt-in provision for customer consent was ruled unconstitutional.

``Our view is that it's still very early where the applications are, therefore to try to set regulations might kill some applications we may want,'' said Jerry Cerasale, senior vice president for government affairs for the marketing group.

DIALING FOR HELP

The FCC mandated improvements in location technology in recognition of the increasing role of mobile phones in reporting emergencies -- about a third of these calls daily.

While 911 emergency calls from a land line display an address on an operator's computer screen, mobile callers must identify nearby landmarks or have wireless companies trace the call to the closest cell tower for an approximate location.

To resolve that problem, federal regulators ordered AT&T, Cingular Wireless (NYSE:BLS - news) (NYSE:SBC - news), Verizon Wireless (NYSE:VOD - news) (VOD.L) and others to upgrade their systems and for phone manufacturers to include location devices.

By Oct. 1, companies will either have to begin selling handsets that are equipped with locater devices or have to upgrade their networks so a caller's location can be pinpointed by signal strength.

But the FCC left it up to carriers to figure out how to recoup costs for providing location information to emergency agencies, opening the door for revenue-making applications using the technology.

``There is a great hope for convenience and efficiency but in this case people are fearing privacy may be eroding,'' said Stephen Carter, chief executive of Cingular Wireless, the nation's second-biggest wireless carrier.

``We don't want to have to go back and fix it once we've started,'' he told a recent forum on wireless location privacy. Plus, ``consumer excitement is just not there yet.''

Asia and Europe have moved faster than the United States to develop so-called mobile commerce services that allow consumers to check their bank accounts or order pizzas through their mobile phones, but the two regions have different ideas on privacy.

Already, Japanese consumers can download maps onto their wireless phones and some Web-based service providers like Cybird Co. Ltd. (4823.Q) want to send advertisements to consumers when they are near a store but privacy concerns have not been often voiced.

Meanwhile in Scandinavia, mobile network operators continue to study location-tracking services, but have been reluctant to make such services widely available for fear of violating strong privacy laws guarding the release of personal data.