Take note that while conducting his tests, he was running on Windows Phone OS 7.0.7004.0, so we can’t be sure if Mango will “fix” this issue or if it has been removed since. In the tests that he conducted, it seemed that information such as OS version, Device Information, Wireless access points in the vicinity and other identifiers were being transmitted to agps.location.live.net and inference.location.live.net.
What was troubling was that all these packets of information are being sent even before he gave his consent to the camera application to collect his location data. It seems that this applies to the different builds of WP7 (Mango not withstanding). We can’t be sure what Microsoft is using this location data for, and the question that is being asked is whether Microsoft stores this data or if they’re kept as a temporary file and then deleted after it has been used. Either way, if this turns out to be true, Microsoft will have a lot of explaining to do.