    [Senate Hearing 108-956]
    [From the U.S. Government Publishing Office]

                                                            S. Hrg. 108-956

                          THE WIRELESS 411 PRIVACY ACT

    =======================================================================

                                    HEARING

                                   before the

                             COMMITTEE ON COMMERCE,
                          SCIENCE, AND TRANSPORTATION
                              UNITED STATES SENATE

                          ONE HUNDRED EIGHTH CONGRESS

                                 SECOND SESSION

                                   __________

                               SEPTEMBER 21, 2004

                                   __________

        Printed for the use of the Committee on Commerce, Science, and
                                 Transportation

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                                    _____

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           SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION

                          ONE HUNDRED EIGHTH CONGRESS

                                 SECOND SESSION

                         JOHN McCAIN, Arizona, Chairman
    TED STEVENS, Alaska                  ERNEST F. HOLLINGS, South
    CONRAD BURNS, Montana                    Carolina, Ranking
    TRENT LOTT, Mississippi              DANIEL K. INOUYE, Hawaii
    KAY BAILEY HUTCHISON, Texas          JOHN D. ROCKEFELLER IV, West
    OLYMPIA J. SNOWE, Maine                  Virginia
    SAM BROWNBACK, Kansas                JOHN F. KERRY, Massachusetts
    GORDON H. SMITH, Oregon              JOHN B. BREAUX, Louisiana
    PETER G. FITZGERALD, Illinois        BYRON L. DORGAN, North Dakota
    JOHN ENSIGN, Nevada                  RON WYDEN, Oregon
    GEORGE ALLEN, Virginia               BARBARA BOXER, California
    JOHN E. SUNUNU, New Hampshire        BILL NELSON, Florida
                                         MARIA CANTWELL, Washington
                                         FRANK R. LAUTENBERG, New Jersey
          Jeanne Bumpus, Republican Staff Director and General Counsel
                 Robert W. Chamberlin, Republican Chief Counsel
          Kevin D. Kayes, Democratic Staff Director and Chief Counsel
                    Gregg Elias, Democratic General Counsel

                                C O N T E N T S

                                  ----------
                                                                       Page
    Hearing held on September 21, 2004...............................     1
    Statement of Senator Allen.......................................     1
    Statement of Senator Boxer.......................................    13
        Prepared statement...........................................    13
    Statement of Senator Brownback...................................    22
        Prepared statement...........................................    22
    Statement of Senator Ensign......................................    21
    Statement of Senator Smith.......................................    17
    Statement of Senator Wyden.......................................    16

                                   Witnesses

    Cox, Patrick M., CEO, Qsent, Inc.................................    30
        Prepared statement...........................................    31
    Largent, Hon. Steve, President and CEO, Cellular
      Telecommunications and Internet Association....................    34
        Prepared statement...........................................    36
    Pierz, Kathleen A., Managing Partner, The Pierz Group, LLC.......    23
        Prepared statement...........................................    24
    Rotenberg, Marc, Executive Director, Electronic Privacy
      Information Center; Adjunct Professor, Georgetown University
      Law Center.....................................................    38
        Prepared statement...........................................    40
    Specter, Hon. Arlen U.S. Senator from Pennsylvania...............    51
        Prepared statement...........................................    52
    Strigl, Dennis F., President and CEO, Verizon Wireless...........    18
        Prepared statement...........................................    19

                          THE WIRELESS 411 PRIVACY ACT

                                  ----------

                          TUESDAY, SEPTEMBER 21, 2004

                                           U.S. Senate,
            Committee on Commerce, Science, and Transportation,
                                                        Washington, DC.
        The Committee met, pursuant to notice, at 2:30 p.m. in room
    SR-253, Russell Senate Office Building, Hon. George Allen
    presiding.

                OPENING STATEMENT OF HON. GEORGE ALLEN,
                       U.S. SENATOR FROM VIRGINIA

        Senator Allen. Good afternoon, I call this hearing to
    order. Senator Specter was to be speaking in the first panel,
    so to speak. If he doesn't get here on time, we're going to go
    straight to the panel, and I know we have many witnesses we
    want to hear from, so I'll make an opening statement, allow
    Senator Boxer to have an opening statement in the event that
    Senator Specter appears, he can make a statement, if not, we
    will proceed to the witnesses who have come here. Thank you for
    being with us today.
        We are examining in this Committee, Senate Bill 1963, the
    Wireless 411 Privacy Act, which is sponsored by Senator Specter
    and Boxer. As many of us are aware, and everyone clearly in
    this room are, there are more wireless telephone users now than
    any time in history. There are over 160 million in the United
    States. Wireless phone service has proven valuable to millions
    of Americans because of their mobility, because of its service
    quality, its coverage, and its reliability.
        Personally, going around Virginia in an RV with a laptop
    getting Internet coverage through Verizon, its not just theory,
    it was great practice to not have Blackberry coverage and kind
    of weak cell phone coverage. To be honest with you, in some
    places, it was great to be able to access information.
    Obviously, Mr. Largent would appreciate, I was on CBS
    Sportsline.com, getting play-by-play of my brother's pre-season
    game, and that coverage is, of course, very important to a few
    people. Congressman Largent understands what's important in the
    real world.
        Senator McCain posed questions to 5 or 6 of the top
    wireless carriers, questions on this issue. Those questions
    have been responded to by those companies and they are from
    Cingular, Verizon Wireless, Spring, Verizon, and T-Mobile. At
    any rate, the questions and the answers will be made a part of
    the record.
        The facts as we proceed in this hearing, are going to be
    pretty clear, but, according to the Cellular Telecommunications
    and Internet Association, there are more than 180 wireless
    services competing in the United States which means that's
    great for consumers. Approximately 93 percent live in markets
    that are served by four or more wireless providers, and nearly
    98 percent of Americans live in a market that is served by
    three or more providers.
        Now, by all accounts, the wireless industry is intensely
    competitive, and that competition continues to bring
    extraordinary benefits to consumers. According to the FCC, cell
    phone use in terms of minutes has increased by 22 percent per
    consumer while service costs have fallen by 13 percent.
        Overall, when we see this sort of a situation, consumers
    are the ultimate winners in a competitive marketplace, which
    enables them to determine for themselves or their businesses
    what they value and what they don't value when it comes to
    their mobile phones. More recently, wireless customers, both
    residential and businesses, have indicated a desire to make
    their wireless telephone number available to others through
    directory assistance.
        To meet this consumer demand, the wireless industry is
    considering offering wireless directory assistance services, or
    411. At the same time, there are efforts to create a nationwide
    directory and that, in doing so, has raised privacy concerns
    for consumers who don't want people calling them up, and want
    to keep their phone numbers private, that is one of the
    benefits of cell phones in some peoples' desires.
        Now, today's hearing is to examine those privacy concerns
    and what the industry is actively considering to address them;
    when they're going to be providing, and, not all will be
    providing directory assistance, some may, but at any rate, look
    at the scope of it, what is being planned and what will be
    available to customers.
        Now, generally speaking I think each company in a free
    market system ought to be able to make a decision for providing
    wireless directory for itself based on its own individual
    assessment of what its customers and the general marketplace
    demands. Likewise, I believe that each customer should have the
    freedom to make this decision for himself or herself based on
    their power to select the carrier they want for their
    particular needs or preferences.
        I don't think it is necessarily mutually exclusive that
    either you have directory assistance through a company, or you
    have one that doesn't, I think that the marketplace and
    companies will say, ``If you don't want your number in a
    directory assistance, you don't have to opt in for it.'' And it
    doesn't have to be just one way or the other, and I think that
    clearly in the competitive marketplace, the companies, at least
    I have faith in the companies acting that way.
        So therefore, my general philosophy is before we move
    forward as a government with new laws and legislation, my
    preference is to allow consumers to use this vibrantly
    competitive market to pick features and services that they
    want. I'm hesitant to support additional regulations, however
    well intended, which effectively makes the choices for
    consumers.
        [Responses to Senator McCain's questions to wireless
    companies follow:]

                                  Congress of the United States
                                     Washington, DC, September 15, 2004
    Mr. Gary Forsee,
    Chairman and CEO,
    Sprint Corporation,
    Overland Park, KS.

    Dear Mr. Forsee:

        Recent press accounts indicate that a consortium of five of the six
    national wireless carriers, with the assistance of the Cellular
    Telecommunications & Internet Association, are creating a multi-carrier
    database of subscribers' phone numbers in order to provide the wireless
    phone numbers of their customers to consumers who call directory
    assistance services (also known as ``411'' services). While presenting
    an opportunity for wireless telephone consumers, including subscribers
    without wireline phones and small business users, to make their
    telephone numbers more widely available to friends and to potential
    customers, this action also raises issues of wireless telephone number
    privacy that are of great interest to the American public and to
    Congress.
        In response to consumer concerns about such proposed services,
    several bills on wireless directory assistance have been introduced
    this Congress. The Senate Committee on Commerce, Science, and
    Transportation has scheduled a hearing on these services and related
    legislation for Tuesday, September 21, 2004, during which testimony
    will be heard from industry representatives and other interested
    parties. The House of Representatives Committee on Energy and Commerce
    also plans to hold a hearing on these services in the following weeks.
        In anticipation of these hearings and to assist the Committees in
    understanding the views of all six national wireless carriers (some of
    which may not have the opportunity to testify), we would appreciate
    receiving your responses to the following questions prior to the first
    hearing:

      1.  If you offer wireless directory services, will your subscribers
            be given a choice of whether to have their number(s) listed in
            a directory or not? If so, how would they exercise such choice
            (i.e., opt-in or opt-out), and would it vary depending on
            whether it was a new or existing subscriber making the choice?

      2.  Do you plan to charge subscribers to keep their wireless
            number(s) unlisted?

      3.  Are your current terms of service with customers consistent with
            your responses to questions 1 and 2?

        We appreciate your efforts to provide this information to the
    Committees and to Congress by Monday, September 20.
                Sincerely,
                                                   John McCain,
                                                              Chairman,
                                             Senate Committee on Commerce,
                                               Science, and Transportation.

                                                    Joe Barton,
                                                              Chairman,
                                        House of Representatives Committee
                                                    on Energy and Commerce.

                                                    Fred Upton,
                                                              Chairman,
                                     House of Representatives Subcommittee
                                    on Telecommunications and the Internet.
                                     ______

                                                         Sprint
                                  Overland Park, KS. September 20, 2004
    Hon. John McCain,
    Chairman,
    Senate Committee on Commerce, Science, and Transportation.

    Hon. Joe Barton,
    Chairman,
    House of Representatives Committee on Energy and Commerce.

    Hon. Fred Upton,
    Chairman,
    House of Representatives Subcommittee on Telecommunications and the
                Internet.

    Dear Chairmen:

        Thank you for your interest in Wireless Directory Assistance (WDA).
    Provided below are responses to the questions you asked in your letter
    to me dated September 15, 2004.
        As you are aware, there are more wireless telephone users now than
    any time in history. Many wireless users, both residential users and
    businesses, wish to make their wireless telephone numbers available to
    others through directory assistance. Currently, there is no convenient
    method in place for wireless users to do that. To meet subscriber
    demand, Sprint is considering offering WDA. Although Sprint's plans in
    this area are not yet finalized, Sprint commits that the following
    points will be at the core of any offering.

        Question 1. If you offer wireless directory services, will your
    subscribers be given a choice of whether to have their numbers(s)
    listed in a directory or not? If so, how would they exercise such
    choice (i.e., opt-in or opt-out), and would it vary depending on
    whether it was a new existing subscriber making the choice?
        Answer: Wireless numbers will only be made available to WDA if a
    specific customer directs Sprint to make them available. This opt-in
    method will apply to both existing subscribers and new subscribers.
    Subscribers' telephone numbers will not be made available to WDA, by
    default. In addition, subscribers will be able to revoke their opt-in
    consent at any time.

        Question 2. Do you plan to charge subscribers to keep their
    wireless number(s) unlisted?
        Answer: Sprint does not plan to charge existing or new subscribers
    for keeping their number out of WDA listing. Also, Sprint has no plans
    to charge existing or new subscribers to remove their listing from WDA.

        Question 3. Are your current terms of service with customers
    consistent with your responses to questions 1 and 2?
        Answer: Subscriber consent will not be obtained through service
    contracts. Sprint's current subscriber contracts do not specifically
    address WDA. In all cases, subscribers will have to specifically direct
    Sprint to make their numbers available to WDA before Sprint will do so.
    Even if an older version of Sprint's service contract references
    directory assistance, Sprint will adhere to the commitments listed in
    response to questions 1 and 2.

        Sprint believes that carrier WDA plans are consistent with
    important privacy objectives and will increase customer choices. Absent
    an effective opt-in WDA approach as Sprint has outlined above, inter-
    modal competition will be harmed and customers who only have a wireless
    phone and want to be reached will be needlessly out of touch.
                Sincerely,
                                                Gary D. Forsee.
                                  Chairman and Chief Executive Officer.
                                     ______

                                  Congress of the United States
                                     Washington, DC, September 15, 2004
    Mr. John D. Zeglis,
    Chairman and CEO,
    AT&T Wireless,
    Washington, DC.

    Dear Mr. Zeglis:

        Recent press accounts indicate that a consortium of five of the six
    national wireless carriers, with the assistance of the Cellular
    Telecommunications & Internet Association, are creating a multi-carrier
    database of subscribers' phone numbers in order to provide the wireless
    phone numbers of their customers to consumers who call directory
    assistance services (also known as ``411'' services). While presenting
    an opportunity for wireless telephone consumers, including subscribers
    without wireline phones and small business users, to make their
    telephone numbers more widely available to friends and to potential
    customers, this action also raises issues of wireless telephone number
    privacy that are of great interest to the American public and to
    Congress.
        In response to consumer concerns about such proposed services,
    several bills on wireless directory assistance have been introduced
    this Congress. The Senate Committee on Commerce, Science, and
    Transportation has scheduled a hearing on these services and related
    legislation for Tuesday, September 21, 2004, during which testimony
    will be heard from industry representatives and other interested
    parties. The House of Representatives Committee on Energy and Commerce
    also plans to hold a hearing on these services in the following weeks.
        In anticipation of these hearings and to assist the Committees in
    understanding the views of all six national wireless carriers (some of
    which may not have the opportunity to testify), we would appreciate
    receiving your responses to the following questions prior to the first
    hearing:

      1.  If you offer wireless directory services, will your subscribers
            be given a choice of whether to have their number(s) listed in
            a directory or not? If so, how would they exercise such choice
            (i.e., opt-in or opt-out), and would it vary depending on
            whether it was a new or existing subscriber making the choice?

      2.  Do you plan to charge subscribers to keep their wireless
            number(s) unlisted?

      3.  Are your current terms of service with customers consistent with
            your responses to questions 1 and 2?

        We appreciate your efforts to provide this information to the
    Committees and to Congress by Monday, September 20.
                Sincerely,
                                                   John McCain,
                                                              Chairman,
                                             Senate Committee on Commerce,
                                               Science, and Transportation.

                                                    Joe Barton,
                                                              Chairman,
                                        House of Representatives Committee
                                                    on Energy and Commerce.

                                                    Fred Upton,
                                                              Chairman,
                                     House of Representatives Subcommittee
                                    on Telecommunications and the Internet.
                                     ______

                                                        January 3, 2005
    Hon. John McCain,
    Chairman,
    Senate Committee on Commerce, Science, and Transportation,
    Washington, DC.

    Dear Chairman McCain:

        Thank you for the opportunity to explain AT&T Wireless' policies
    regarding the planned Wireless 411 database. We are pleased to respond
    to your letter dated September 15, 2004.
        Protecting customer privacy is one of our highest priorities, and
    this commitment is reflected in our approach to Wireless 411. I have
    attached a document that provides an in-depth response to the specific
    questions outlined in your letter. You will note when you review our
    response that it is our intention only to participate in a Wireless 411
    database if it is completely optional for our customers, is of no cost
    to participating or non-participating customers and meets the strict
    standards of our privacy policy. If a participating customer later
    decides to remove his/her wireless number from the database, it will be
    quick and easy to do so.
        We believe that Wireless 411 service can offer significant benefits
    to our customers. Laws that restrict the offering of wireless 411
    service could hamper our delivery of this valuable benefit.

       More small businesses and sole proprietors are using
            wireless phones as their primary or only means of voice
            communications with customers and suppliers. We do not believe
            that this technology choice should put a business at a
            disadvantage in comparison to competitors that utilize land
            line phones and can therefore list their phone numbers. The
            Wireless 411 service will allow our business subscribers to
            make their phone numbers accessible to their customers and
            suppliers.

       In addition, a growing number of consumers have chosen to
            use a wireless phone as their only phone. These consumers
            should have an opportunity to make their contact information
            available to friends and relatives through directory assistance
            services.

       Finally, we believe there are customers who will choose to
            participate in Wireless 411 for the peace of mind that comes
            with having their phone number accessible in an urgent
            situation.

        Again, thank you for the opportunity to share our policies
    concerning our planned Wireless 411 service. We are confident that
    Wireless 411 offers significant consumer benefits, and we remain
    committed to providing our wireless service in a way that protects
    customer privacy.
                Sincerely,
                                                John D. Zeglis,
                                                      Chairman and CEO,
                                                             AT&T Wireless.
    Cc: Chairman John McCain
    Chairman Joe Barton
                                     ______

     AT&T Wireless' Response to September 15, 2004 Letter re: Wireless 411
      1.  If you offer wireless directory services, will your subscribers
            be given a choice of whether to have their number(s) listed in
            a directory or not? If so, how would they exercise such choice
            (i.e., Opt-in or opt-out), and would it vary depending on
            whether it was a new or existing subscriber making the choice?

         Customers will be given a choice whether to have their number(s)
            listed in the database. Only customers who specifically request
            to be included will have their number available for lookup
            through Wireless 411. In other words, customers must opt in by
            taking an affirmative step to make their numbers available.
            This policy applies to all of our customers.

      2.  Do you plan to charge subscribers to keep their wireless
            number(s) unlisted?

         No. Just like today, we will not charge to keep a number unlisted.

      3.  Are your current terms of service with customers consistent with
            your responses to questions 1 and 2?

         Yes. All AT&T Wireless customers--regardless of the language in
            earlier contracts--will have the choice whether to be included
            in the Wireless 411 database. In addition, no customer will be
            charged to keep their phone number unlisted. We believe this
            approach best meets the desires of consumers.

         As of June 2004 the language in the AT&T Wireless Privacy Policy,
            which is referenced in our Service Agreement reads as follows:

         ``AT&T Wireless does not currently disclose wireless numbers in
            directory assistance listings or published directories. If we
            do so in the future, you will be able to choose whether your
            number is listed.''

        It should be noted that in addition to the above privacy measures,
    the names and numbers included in the Wireless 411 database will not be
    printed in a directory or published online. The database will not be
    for sale to third parties. Wireless 411 service will only allow 411
    callers to get a wireless subscriber's phone number if that subscriber
    chooses to make it available, and then only in response to a specific
    request for an individual. In addition, customers who have chosen to
    list their numbers can choose to remove their numbers from the database
    at any time. We plan to update customer preferences in the database on
    a daily basis.
                                     ______

                                  Congress of the United States
                                     Washington, DC, September 15, 2004
    Mr. Stanley T. Sigman,
    President and CEO,
    Cingular Wireless,
    Atlanta, GA.

    Dear Mr. Sigman:

        Recent press accounts indicate that a consortium of five of the six
    national wireless carriers, with the assistance of the Cellular
    Telecommunications & Internet Association, are creating a multi-carrier
    database of subscribers' phone numbers in order to provide the wireless
    phone numbers of their customers to consumers who call directory
    assistance services (also known as ``411'' services). While presenting
    an opportunity for wireless telephone consumers, including subscribers
    without wireline phones and small business users, to make their
    telephone numbers more widely available to friends and to potential
    customers, this action also raises issues of wireless telephone number
    privacy that are of great interest to the American public and to
    Congress.
        In response to consumer concerns about such proposed services,
    several bills on wireless directory assistance have been introduced
    this Congress. The Senate Committee on Commerce, Science, and
    Transportation has scheduled a hearing on these services and related
    legislation for Tuesday, September 21, 2004, during which testimony
    will be heard from industry representatives and other interested
    parties. The House of Representatives Committee on Energy and Commerce
    also plans to hold a hearing on these services in the following weeks.
        In anticipation of these hearings and to assist the Committees in
    understanding the views of all six national wireless carriers (some of
    which may not have the opportunity to testify), we would appreciate
    receiving your responses to the following questions prior to the first
    hearing:

      1.  If you offer wireless directory services, will your subscribers
            be given a choice of whether to have their number(s) listed in
            a directory or not? If so, how would they exercise such choice
            (i.e., opt-in or opt-out), and would it vary depending on
            whether it was a new or existing subscriber making the choice?

      2.  Do you plan to charge subscribers to keep their wireless
            number(s) unlisted?

      3.  Are your current terms of service with customers consistent with
            your responses to questions 1 and 2

        We appreciate your efforts to provide this information to the
    Committees and to Congress by Monday, September 20.
                Sincerely,
                                                   John McCain,
                                                              Chairman,
                                             Senate Committee on Commerce,
                                               Science, and Transportation.

                                                    Fred Upton,
                                                              Chairman,
                                     House of Representatives Subcommittee
                                    on Telecommunications and the Internet.

                                                    Joe Barton,
                                                              Chairman,
                                        House of Representatives Committee
                                                    on Energy and Commerce.
                                     ______

                                                     September 17, 2004
    To: John McCain, Chairman,
    Senate Committee on Commerce, Science, and Transportation.

    Joe Barton, Chairman,
    House of Representatives Committee on Energy and Commerce.

    Fred Upton, Chairman,
    House of Representatives Subcommittee on Telecommunications and
                Internet.

        Thank you for the opportunity to provide specific information on
    Cingular's approach to offering wireless directory assistance to our
    customers. There has been a great deal of misinformation reported on
    this topic and I am pleased to have the chance to set the record
    straight by communicating directly with the Committee members that are
    reviewing this matter. Cingular is dedicated to ensuring that the
    customer's right to choose is respected.
        Your request consisted of three questions which I have restated and
    answered below:

      1.  If you offer wireless directory services, will your subscribers
            be given a choice of whether to have their number(s) listed in
            the directory or not? If so, how would they exercise such
            choice, and would it vary depending on whether it was a new or
            existing subscriber making the choice?

         Cingular subscribers will be given the choice to have their
            number(s) listed through an opt-in method. Opt-in will not be
            tied to the selection of a service plan or any other available
            feature, but will be a stand-alone option that may be presented
            to the customer at the point-of-sale, during a call into
            customer service or on Cingular's website. The opt-in process
            will be the same for both new and existing customers.

      2.  Do you have any plans to charge subscribers to keep their
            wireless number(s) unlisted?

         Cingular subscribers will not be charged if they elect to keep
            their wireless number(s) unlisted. We believe that there should
            not be any financial disincentives for those customers that
            choose not to participate in listing their number(s). In
            addition, there will not be any charges applied if a customer
            that has previously opted-in changes his mind and asks to be
            removed from the database.

      3.  Are your current terms of service with customers consistent with
            your responses to questions 1 and 2?

         Yes.

        We at Cingular are committed to protecting the privacy of our
    subscribers and are taking the necessary precautions to ensure that if
    a customer elects to be listed; his or her wireless account information
    will not be used for any purpose other than directory assistance. I
    believe that sufficient safeguards exist to protect the privacy rights
    of consumers and that wireless carriers have an inherent vested
    interest in preserving them.
                                                   Stan Sigman,
                                                     President and CEO,
                                                         Cingular Wireless.
                                     ______

                                  Congress of the United States
                                     Washington, DC, September 15, 2004
    Mr. Timothy M. Donahue,
    President and CEO,
    Nextel Communications,
    Reston, VA.

    Dear Mr. Donahue:

        Recent press accounts indicate that a consortium of five of the six
    national wireless carriers, with the assistance of the Cellular
    Telecommunications & Internet Association, are creating a multi-carrier
    database of subscribers' phone numbers in order to provide the wireless
    phone numbers of their customers to consumers who call directory
    assistance services (also known as ``411'' services). While presenting
    an opportunity for wireless telephone consumers, including subscribers
    without wireline phones and small business users, to make their
    telephone numbers more widely available to friends and to potential
    customers, this action also raises issues of wireless telephone number
    privacy that are of great interest to the American public and to
    Congress.
        In response to consumer concerns about such proposed services,
    several bills on wireless directory assistance have been introduced
    this Congress. The Senate Committee on Commerce, Science, and
    Transportation has scheduled a hearing on these services and related
    legislation for Tuesday, September 21, 2004, during which testimony
    will be heard from industry representatives and other interested
    parties. The House of Representatives Committee on Energy and Commerce
    also plans to hold a hearing on these services in the following weeks.
        In anticipation of these hearings and to assist the Committees in
    understanding the views of all six national wireless carriers (some of
    which may not have the opportunity to testify), we would appreciate
    receiving your responses to the following questions prior to the first
    hearing:

      1.  If you offer wireless directory services, will your subscribers
            be given a choice of whether to have their number(s) listed in
            a directory or not? If so, how would they exercise such choice
            (i.e., opt-in or opt-out), and would it vary depending on
            whether it was a new or existing subscriber making the choice?

      2.  Do you plan to charge subscribers to keep their wireless
            number(s) unlisted?

      3.  Are your current terms of service with customers consistent with
            your responses to questions 1 and 2?

        We appreciate your efforts to provide this information to the
    Committees and to Congress by Monday, September 20.
                Sincerely,
                                                   John McCain,
                                                              Chairman,
                                             Senate Committee on Commerce,
                                               Science, and Transportation.

                                                    Joe Barton,
                                                              Chairman,
                                        House of Representatives Committee
                                                    on Energy and Commerce.

                                                    Fred Upton,
                                                              Chairman,
                                     House of Representatives Subcommittee
                                    on Telecommunications and the Internet.
                                     ______

                                                     September 21, 2004
    Hon. John McCain,
    Chairman,
    Committee on Commerce, Science, and Transportation,
    United States Senate,
    Washington, DC.

    Hon. Joe Barton,
    Chairman,
    Committee on Energy and Commerce,
    U.S. House of Representatives,
    Washington, DC.

    Hon. Fred Upton,
    Chairman,
    Subcommittee on Telecommunications and the Internet,
    House Energy and Commerce Committee,
    Washington, DC.

    Dear Chairmen McCain, Barton and Upton:

        Thank you for your September 15, 2004, letter regarding wireless
    directory assistance and Nextel Communications' interests in providing
    such services to our customers. In furtherance of our efforts to meet
    the demands for new services and applications, Nextel will offer
    wireless directory assistance only to those who are interested. Nextel
    customers will be provided information on this new option, including
    instructions on ``opting-in'' or ``opting-out'' of the service.
        We will do so under the strictest adherence to our strong policy on
    protecting customer privacy. In response to your specific questions,
    please be advised of the following:

      1)  Nextel will offer wireless directory assistance to its customers,
            each of whom will determine whether their number will be listed
            in the directory. Further, if a customer chooses to have their
            number included in the directory, it will be done only if the
            subscriber gives a clear, unambiguous and verifiable
            affirmation of their decision and at no charge. This will apply
            to existing and prospective customers. For those subscribers
            who wish to remain unlisted they will not have to take any
            action.

      2)  For those customers who choose not to have their numbers listed
            in our wireless directory, Nextel will not charge any fee, nor
            impose any fine or penalty. Further, customers who become
            listed may choose to ``opt-out'' of the program at any time and
            at no charge.

      3)  Nextel is in the process of modifying both its subscriber
            agreement and its privacy policy to reflect the guarantee that
            our customers will have the choice of participating in our
            wireless directory assistance, with no charge either for
            participation or non-participation in the program.

        Nextel and its employees are strongly committed to protecting the
    privacy of our customer, including under one directory assistance
    program. Nextel will not publish the wireless directory assistance
    information or provide access to the directory assistance database to
    any entity other than the directory assistance provider. Be assured
    that we will take all necessary steps to protect our customers' privacy
    within the dynamic wireless communications market.
                Sincerely,
                                                   Tim Donahue,
                                 President and Chief Executive Officer,
                                                     Nextel Communications.
                                     ______

                                  Congress of the United States
                                     Washington, DC, September 15, 2004
    Mr. Robert Dotson,
    President and CEO,
    T-Mobile USA,
    New York, NY.

    Dear Mr. Dotson:

        Recent press accounts indicate that a consortium of five of the six
    national wireless carriers, with the assistance of the Cellular
    Telecommunications & Internet Association, are creating a multi-carrier
    database of subscribers' phone numbers in order to provide the wireless
    phone numbers of their customers to consumers who call directory
    assistance services (also known as ``411'' services). While presenting
    an opportunity for wireless telephone consumers, including subscribers
    without wireline phones and small business users, to make their
    telephone numbers more widely available to friends and to potential
    customers, this action also raises issues of wireless telephone number
    privacy that are of great interest to the American public and to
    Congress.
        In response to consumer concerns about such proposed services,
    several bills on wireless directory assistance have been introduced
    this Congress. The Senate Committee on Commerce, Science, and
    Transportation has scheduled a hearing on these services and related
    legislation for Tuesday, September 21, 2004, during which testimony
    will be heard from industry representatives and other interested
    parties. The House of Representatives Committee on Energy and Commerce
    also plans to hold a hearing on these services in the following weeks.
        In anticipation of these hearings and to assist the Committees in
    understanding the views of all six national wireless carriers (some of
    which may not have the opportunity to testify), we would appreciate
    receiving your responses to the following questions prior to the first
    hearing:

      1.  If you offer wireless directory services, will your subscribers
            be given a choice of whether to have their number(s) listed in
            a directory or not? If so, how would they exercise such choice
            (i.e., opt-in or opt-out), and would it vary depending on
            whether it was a new or existing subscriber making the choice?

      2.  Do you plan to charge subscribers to keep their wireless
            number(s) unlisted?

      3.  Are your current terms of service with customers consistent with
            your responses to questions 1 and 2?

        We appreciate your efforts to provide this information to the
    Committees and to Congress by Monday, September 20.
                Sincerely,
                                                   John McCain,
                                                              Chairman,
                                             Senate Committee on Commerce,
                                               Science, and Transportation.

                                                    Joe Barton,
                                                              Chairman,
                                    House of Representatives Committee
                                                on Energy and Commerce.

                                                    Fred Upton,
                                                              Chairman,
                                     House of Representatives Subcommittee
                                    on Telecommunications and the Internet.
                                     ______

                                             T-Mobile USA, Inc.
                                       Bellevue, WA, September 20, 2004
    Hon. John McCain,
    U.S. Senate,
    Washington, DC.

    Hon. Joe Barton,
    U.S. House of Representatives,
    Washington, DC.

    Hon. Fred Upton,
    U.S. House of Representatives,
    Washington, DC.

    Dear Chairmen McCain, Barton, and Upton,

        This letter responds to your request for information about T-
    Mobile's efforts to offer subscribers the opportunity to list their
    wireless numbers in an electronic 411 directory, set forth in your
    letter dated September 15, 2004. T-Mobile USA, Inc. and a number of
    other wireless carriers, with the assistance of the Cellular
    Telecommunications & Internet Association, are in the process of
    creating 411 service for wireless subscriber phone numbers. First, I'd
    like to provide you with an introduction to T-Mobile.
        T-Mobile is one of the fastest growing nationwide wireless service
    providers, offering digital voice, messaging, and high-speed wireless
    data services to more than 15.4 million customers in the United States.
    A cornerstone of T-Mobile's strong consumer appeal has been its Get
    More business strategy to provide customers with the best overall
    value in their wireless service. T-Mobile has more than 22,000
    employees across the country dedicated to delivering on its Get More
    strategy to provide customers with more minutes, more features, and
    more service. These efforts were recognized in the J.D. Power &
    Associates' 2004 U.S. Wireless Regional Customer Satisfaction Index
    Study, in which T-Mobile received the highest rankings in all six
    regions of the country. Mobile professionals and homeowners, including
    those who have replaced their traditional wireline phone with a
    wireless phone, have expressed a desire to have their wireless numbers
    listed in a wireless directory. T-Mobile plans to offer this compelling
    service to customers who request it and, in so doing, is working with
    other wireless carriers and the CTIA to design this service to meet our
    customers' expectations of privacy. (It is worth noting that some
    landline carriers may not be as eager to provide wireless customers who
    have ``cut the cord'' with the opportunity to be listed in a wireless
    directory.)
        As a result of our Get More commitment, one issue has remained
    foremost in T-Mobile's mind throughout the design and development of
    wireless 411 service--the privacy expectations of our subscribers. To
    that end, T-Mobile is working to ensure that the design of the database
    of wireless numbers contains privacy protections for subscribers who
    choose to be listed in a 411 database. These protections include
    listing a subscriber's wireless number in the 411 database only after
    the subscriber has made the choice to ``opt-in'' to the service and
    ensuring that the numbers in the 411 database will not be sold to
    telemarketers.
        Below are the questions posed in your letter and T-Mobile's
    responses.

      1.  If you offer wireless directory services, will your subscribers
            be given a choice of whether to have their number(s) listed in
            a directory or not? If so, how would they exercise such choice
            (i.e., opt-in or opt-out), and would it vary depending on
            whether it was a new or existing subscriber making the choice?

        If T-Mobile offers wireless directory services, T-Mobile
    subscribers will be required to affirmatively opt-in to the electronic
    411 directory. T-Mobile includes in its written service agreement an
    opt-in box on the front page that customers may check to list their
    numbers in the wireless directory. This opt-in provision is clearly
    identified under a section entitled ``Important Customer Information.''
    Customers who activate service online, or via telesales, also will be
    required to affirmatively opt-in to list their numbers in the
    directory.

        Like new customers, existing customers must opt-in to list their
    numbers in the wireless directory. T-Mobile is determining how best to
    communicate the opt-in election to existing customers. T-Mobile is
    looking into providing customers the choice to opt-in through existing
    password-protected, personalized customer Web pages, where they manage
    their accounts online.

      2.  Do you plan to charge subscribers to keep their wireless
            number(s) unlisted?

        T-Mobile does not plan to charge subscribers to keep their wireless
    numbers unlisted, regardless of the quantity of numbers the subscriber
    wishes to keep unlisted. This decision is consistent with the policy of
    other carriers participating in the wireless directory.

      3.  Are your current terms of service with customers consistent with
            your responses to questions 1 and 2?

        As noted in response to question 1, T-Mobile's service agreement
    for new customers contains an opt-in provision in order for customers
    to choose to list their number in the wireless 411 directory. T-
    Mobile's service agreement contains no provision authorizing charging
    customers for unlisted numbers and, as noted above, T-Mobile has no
    plans to charge subscribers to keep their wireless numbers unlisted. It
    bears repeating that whether a subscriber is new to T-Mobile or is one
    of our many loyal, existing customers, and whether he or she is
    entering into a paper contract in a retail store or an electronic
    contract online, T-Mobile plans to include wireless numbers in the 411
    database only when the subscriber has affirmatively elected to be
    included in such directory.
        In conclusion, we are confident that our opt-in approach addresses
    our customers' desire for wireless directory service and their desire
    for choice and privacy. I hope this information is useful to you and
    please know that T-Mobile will gladly provide additional information at
    your request.
                Sincerely,
                                                 Robert Dotson,
                                 President and Chief Executive Officer,
                                                         T-Mobile USA, Inc.

        Senator Allen. Again, I do want to thank our witnesses for
    being with us today, in the event we move to the witnesses
    after Senator Boxer's statements, and Senator Wyden, are you
    going to want an opening statement? I know, but are you going
    to want to make a statement as well? All right, after
    statements from Senators who are here, in the event that
    Senator Specter doesn't come in, I'll just go like this, that
    will be the signal so that you all can move forward so we can
    hear from you all as well. So that, with the concurrence of
    Senator Wyden, we'd now like to hear from Senator Boxer, one of
    the sponsors of this legislation.
        Senator Boxer.

                   STATEMENT OF HON. BARBARA BOXER,
                      U.S. SENATOR FROM CALIFORNIA

        Senator Boxer. Thank you so much, Senator Allen, and I ask
    that my full statement be submitted for the record.
        [The prepared statement of Senator Boxer follows:]

     Prepared Statement of Hon. Barbara Boxer, U.S. Senator from California
        Mr. Chairman, thank you very much for holding this hearing. I also
    want to thank Senator Specter for inviting me to take the lead with him
    to protect consumer privacy as the wireless phone industry moves
    forward with a 411 directory of cellphone users.
        The Specter-Boxer ``Wireless 411 Privacy Act'' would create a
    national privacy standard for wireless 411. It would give consumers a
    choice as to whether or not their cell phone numbers are listed in a
    directory, it would prohibit cell phone companies from charging
    customers for keeping their numbers private, it would allow the
    directory to connect a subscriber to someone trying to reach them but
    it would not allow the directory to give out telephone numbers, and it
    prohibits the publication of cell phone numbers.
        These are protections consumers want. Both the AARP and Consumers
    Union have come out in support of the legislation.
        There are more than 169 million wireless subscribers in the United
    States who will be affected by the creation of a wireless directory.
    These customers have always had control over who has access to their
    wireless telephone numbers. But, a wireless directory threatens that
    control. And, it threatens to raise consumer bills as well. That is
    because wireless customers in the U.S. pay for all incoming and
    outgoing calls. If consumers are listed without their consent, then
    consumers could be unfairly incurring unwanted charges or using up
    their allotted minutes of use by receiving calls they do not want. Our
    bill seeks to protect consumers from those threats.
        Having reviewed the testimony of the experts here today, and in
    response to concerns some of my colleagues on this Committee have
    expressed, I have filed a manager's amendment to the 411 Wireless
    Privacy Act:

       First, due to concerns with the language requiring that the
            directory not reveal telephone numbers, I have removed that
            language.

       Second, I have also included state preemption language in
            order to establish a national standard of protection for the
            wireless directory and to provide the market with regulatory
            certainty.

       Third, for those small businesses who expressly wish to have
            their cellphone numbers listed, I have included an opt-in
            choice for consumers to allow a directory to publish their
            numbers.

       Lastly, because numbers will be distributed from the
            directory to anyone who requests a number, the manager's
            amendment creates an across the board opt-in choice for
            consumers.

        The industry has said it can meet this level of protection and it
    is now up to us to provide those protections in the law in order to
    ensure that customers are treated fairly.
        The industry claims that the legislation we are discussing today is
    a solution in search of a problem. But, our constituents have made it
    clear that an unregulated wireless 411 directory is a problem.
        Mr. Chairman, most consumers do not know that there is boiler plate
    language in most existing wireless contracts that allow carriers to
    include wireless numbers in a directory. That is, almost all consumers
    have unknowingly already agreed to having their number included in a
    directory. And, while the industry has claimed it is voluntarily
    committed to a certain level of consumer protections, without a law,
    there is nothing to prevent a carrier from changing its mind.
        The industry also claims that a highly competitive cell phone
    market empowers consumers simply to change to another provider if they
    do not like the terms and conditions of a new wireless directory. And
    Verizon, to its credit, has chosen not to participate in the directory
    because of its concerns that a directory threatens consumer privacy.
        But, Mr. Chairman, every consumer, regardless of cellphone service
    provider, should have a right to privacy. Given that all consumers are
    free to control who has their phone numbers today, they should remain
    free to have that control. A wireless directory may work well for a
    minority of consumers without strong privacy protections, but it can
    only work well for everyone if we establish privacy protections in law.
        I want to thank you again for holding this hearing and I look
    forward to hearing the testimony from our witnesses today.

        Senator Boxer. And what I want to do say, the theory of
    waiting until there are problems--but I can tell you right now,
    chaos will reign when our constituents start getting calls on
    their cell phones, which they consider, in many ways, an
    adjunct to their land phone, which they consider, in many
    cases, a phone they carry for urgent business. If you want to
    wait until chaos breaks loose in your state, that's your right.
    But, Senator Specter and I have teamed up in a bi-partisan way
    where common sense dictates that we ought to move forward in a
    fair way. Now, there's a big difference between your landed
    phone, your grounded phone and your wireless phone, in this
    way. Senators, when our constituents get a call, an unwanted
    call on your cell phone, guess who pays for it? Our
    constituents. This is a total outrage. And if we start seeing
    our names published in directories where anyone can call us in
    the middle of the workday, can start bothering our children,
    many of whom have these phones, that they're told, Only use it
    in emergency, I'll tell you that in my opinion, the wrong side
    of the issue to be on. Now, I know these companies well. I've
    got a lot of them in my state. I love them, and I'm a good
    customer of theirs. But all the promises to the contrary where,
    ``We won't sell your name,'' and ``We won't do this and that
    and the other,'' we already know what goes on in the business
    world, it's the bottom line. Our names represent a dollar sign.
    And all that is well and good if I decide to opt in. And that's
    what we're saying. If we want to have our name in a directory,
    whether it's a private directory so that when someone calls 411
    they get my number, fine. Or a published directory, if I want
    to be in that, fine. And the wireless companies will be very
    good at persuading people, I think, that it's to their
    advantage to have their phone listed. And that still, that's
    their job. But I believe I'm here for a reason. And that is to
    protect people. And I would like to ask unanimous consent that
    a letter from the AARP endorsing the Specter-Boxer legislation
    be placed in the record at this time.
        [The information referred to follows:]

                                                           AARP
                                     Washington, DC, September 21, 2004
    Hon. Barbara Boxer,
    Washington, DC.

    Dear Senator Boxer:

        AARP wishes to commend your leadership in introducing S.1963, the
    Wireless 411 Privacy Act, legislation on which the Senate Commerce,
    Science, and Transportation Committee will shortly hear testimony.
    S.1963 would ensure that consumers have a choice as to whether their
    cell phone number is included in a wireless directory and protection
    against charges for keeping it private. Congress should not leave this
    matter to industry discretion.
        While many subscribers to more traditional landline telephone
    service also want to keep their home numbers private, cell phone
    subscribers have additional incentives to do so. First, the privacy of
    wireless subscribers has always been safeguarded. Therefore, many cell
    phone users now expect to receive calls only from those individuals to
    whom they have personally given their number. Second, wireless service
    providers, unlike their landline counterparts, charge for incoming as
    well as outgoing calls. As a result, wireless users have to pay for any
    unwanted, incoming calls.
        A recent study by the AARP Public Policy institute confirms that
    cell phone owners place a high value on the privacy of their cell phone
    numbers. According to the study, an overwhelming majority of cell phone
    owners view the current lack of a publicly available wireless directory
    as a positive and say they do not want to have their number included in
    such a directory if it is created. In fact, they believe that no
    wireless phone number should be added to a wireless directory unless
    the cell phone owner specifically requests it. A copy of the study is
    enclosed for your review.
        We believe that AARP members and residential consumers in general
    deserve the right to maintain the maximum amount of control over the
    disclosure of their wireless phone number. We strongly support your
    effort to enact industry-wide privacy protections for cell phone
    subscribers now. The industry is poised to implement a wireless
    directory assistance service; Congressional action could not be more
    timely.
        If you have any questions or concerns, please do not hesitate to
    call.
                Sincerely,
                                                Michael Naylor,
                                                  Director of Advocacy.
    Enclosure

        Senator Boxer. And also, a consumer union in support of our
    bill that comes from testimony that was given on September,
    actually, today's testimony. We ask that that be placed in the
    record.
        What we have done, what I have done working with Senator
    McCain and others, is to hear some of the problems that certain
    Senators had with our original bill, two of them are here, and
    we have filed a managers' amendment that takes care of their
    problems. Basically, hopefully this will be marked up, I know
    we had bi-partisan support on this Committee, and this
    managers' amendment, I want to take a minute to explain it, due
    to concerns that the language requiring that the directory not
    reveal telephone numbers if somebody has, in fact, opted in, we
    initially said, ``Just connect them to the party.'' Senators
    Smith and Wyden had a problem with that, we wrote an amendment,
    we have fixed that, in the managers' amendment, so you will be
    able to get the number if the person asks for that number and
    they have received permission.
        Second, we have language to establish a national standard
    of protection so the market has regulatory certainty. We have
    in the managers' amendment an across the board opt-in choice
    for all consumers, so we don't make the distinction between
    existing consumers and future consumers, everyone has a chance
    to opt-in to the system. So, what you'll hear from the industry
    today, and God bless them, we're discussing a solution in
    search of a problem. Well, I've lived my life awhile. I know
    what happens when people start getting calls they don't want.
    That's why we have a ``no call'' list, which passed this Senate
    and is the law of the land. And if you think that was an outcry
    from the people, imagine our families that have several cell
    phones, and what is going to be on us if we don't move on this.
    I think Senator Specter had the solution, I think he did a good
    job. Now I'm working on a managers' amendment to make it
    acceptable to a broader group of Senators. I urge you to
    support this and not wait for chaos to break out with these
    unwanted calls that invade someone's privacy. There's going to
    be a backlash, and then we'll have to deal with a mess. I think
    we can do this in a simple way, you want to be listed? Simply
    put your name on the line. You don't want to be listed? You
    don't have to be listed, pretty simple, pretty American to me.
    I think that privacy is an American value, we value our
    privacy. And again, I'll close with this: I have a little
    grandson who is about to get a cell phone for emergencies. And
    these kids don't know, somebody could get their phone number,
    could call them, could con them, to say ``Meet me at the
    corner, I'm calling because your Mom said meet me at the
    corner.'' You're walking into a mess. And I would appeal with
    all my heart and soul to the industry instead of fighting this,
    to come with us, and craft this good bill with us, and do
    something that will make you feel proud, instead of just
    fighting for something that's going to wind up to be a giant
    mess. Thank you very much. I hope Senator Specter shows up, if
    he doesn't, I think I've spoken for him, in some ways. I think
    he could speak for himself probably better, but I think he
    feels as strongly as I do on this. Thank you.
        Senator Allen. Thank you, Senator Boxer, now we'd like to
    hear from Senator Wyden.

                     STATEMENT OF HON. RON WYDEN,
                        U.S. SENATOR FROM OREGON

        Senator Wyden. Thank you, Chairman, thank you for holding
    this hearing. We hope our friend and colleague Senator Specter
    does come, but I think Senator Boxer has accounted well for
    this cause. I particularly want to commend Senator Boxer for
    her willingness to work with myself, Senator Smith, Chairman
    McCain, and others on the question of the managers' amendment,
    because I think we're moving now toward having a good
    bipartisan consensus on this issue. I have long felt that a
    wireless directory assistance service would have to offer in a
    certain way, different from ordinary directory assistance
    would, in effect, be a recipe for consumer confusion. It sounds
    to me like it would be better to have a single, integrated
    directory assistance service where you could call and get both
    a person's regular number and cell phone number, if, and I want
    to emphasize if, he or she chose to have both listed. And so
    what Senator Boxer and Senator Specter have done, in my view,
    it seems to me they have empowered the consumer, they've said
    the guiding principle ought to be consumer choice. Nobody
    should have their cell phone number listed in a directory
    service unless they affirmatively want to. Nobody ought to have
    to pay to keep their cell phone number private. At the same
    time, the Boxer-Specter legislation acknowledges that folks use
    their cell phones in different ways. Some people use it
    infrequently, say a car breaks down, some use it as a private
    line to stay in close touch with a spouse or a child, some use
    it for business, some use it as their only phone, and I'm
    always stunned at how many people use their cell phone, in
    effect, as a full replacement for ordinary land line phones. So
    people have different views on whether and how they want the
    number to be available and it ought to be the policy of this
    Committee, the Committee that takes a lead on these issues, to
    ensure that consumers are fully empowered to make the choice. I
    think there are a number of issues from the standpoint of how
    we look today at this question that need to be examined. I've
    been told, for example, that some cell phone subscriber
    agreements have buried in them somewhere a provision saying
    that the carrier reserves the right to list the user's number
    in a directory. Now, of course, we're going to hear from some
    carriers who currently say that they won't do that any longer,
    but I'm not convinced, and remain concerned that not all
    subscriber agreements reflect the carriers' current statements
    on the subject. So I think that's one we ought to examine, and
    whether, if that's the case, they plan to change the language
    in the subscriber agreements.I'm also pleased as I know my
    friend and colleague Senator Smith is, that Pat Cox is here,
    he's had a long history in our state of being involved in the
    technology sector and giving us very valuable counsel. So, Mr.
    Chairman, I think we can get this worked out. You and I have
    teamed up often, Senator Boxer and Senator Smith, and I think
    with the managers' amendment in particular we're a long way to
    building a good bipartisan consensus, and moving ahead and I
    thank you for holding the hearing.
        Senator Allen. Thank you, Senator Wyden. Senator Smith,
    would you like to make an opening statement since you've been
    referenced?

                  STATEMENT OF HON. GORDON H. SMITH,
                        U.S. SENATOR FROM OREGON

        Senator Smith. Well, Mr. Chairman, I think Senator Wyden
    gave an opening statement very similar to my own. So in the
    interest of time, let me associate my remarks with Senator
    Wyden, and welcome Mr. Pat Cox from Houston, we appreciate his
    coming here, and participating in a very important hearing, so,
    thank you.
        Senator Allen. Thank you, Senator Smith. Panel, please come
    forward. Let me welcome our panel, it's a distinguished panel
    who will shed light on this issue. In reading some of the
    testimony, it seems like there's a great deal of agreement in
    the principles, it's a question of how to effectuate it. Let me
    introduce you, if you don't mind, we'll go in the order in
    which you all are seated here with first Mr. Strigl, let me
    first introduce who each of you are, and then hear from you
    first. Mr. Dennis F. Strigl, President and Chief Executive
    Officer of Verizon Wireless. Next is Mrs. Kathleen Pierz, who
    is the Managing Partner of the Pierz Group. Then we have Mr.
    Patrick M. Cox, who is CEO of Qsent of Portland, Oregon. Then
    we have former Congressman, Steve Largent who is President and
    Chief Executive Office of Cellular Telecommunications &
    Internet Association, and finally, last but not least, Mr. Mark
    Rotenberg, the Excutive Director for Electronic Privacy
    Information Center, otherwise known as EPIC. Thank you,
    gentlemen, and lady, for being with us this afternoon, we'd
    first like to hear from you, Mr. Strigl.

       STATEMENT OF DENNIS F. STRIGL, PRESIDENT AND CEO, VERIZON
                                WIRELESS

        Mr. Strigl. Mr. Chairman, thank you for the opportunity to
    testify today, members of the Committee, it's very nice to be
    before you today, and thank you for holding this hearing on
    this very important privacy issue. It is my understanding that
    the legislation we're here to discuss today assumes that a
    wireless directory is a given. With that, if the purpose of
    today's hearing is to determine if a wireless directory can
    protect a consumer's privacy, my answer is ``No,'' it cannot.
        And therefore, this project should not go forward.
        The wireless industry over the last two decades has built
    an intensely competitive market, one that continues to bring
    extraordinary benefits and choice to consumers. But against
    that backdrop of competition and consumer choice, I think the
    wireless industry is missing the boat when it comes to creating
    a wireless telephone directory. It's a subject that's
    controversial, not only with our customers, but also within the
    industry itself. We at Verizon Wireless think that a wireless
    directory is a terrible idea. Not only the customers oppose it,
    but now you've asked us to appear here today to justify the
    idea, and I submit that it would be far better for the industry
    to abandon this needless project, and instead move ahead to
    devote our time and resources to better serve our customers.
    Any wireless customer today who wants a listing can already get
    one. And, they can get it without charge from Internet
    telephone directories such as Verizon Super Pages.com or
    Switchboard.com. The bottom line is this: Verizon Wireless will
    not participate in the plan you'll be hearing about today, we
    will not publish our customers' cell phone numbers, and here's
    why. Since the beginning, this industry has not published
    wireless phone numbers. We did this consciously for the sake of
    preserving customers' privacy, and control over their bills,
    and discouraging interruptions from unwanted calls. Those basic
    reasons have not changed. In fact, we see more reason today
    than ever to protect a consumer's privacy. The floodgates are
    open to spam, viruses, telemarketing, and other unwanted,
    unsolicited messages on land line phones, on computers, and in
    mailboxes. We think our customers view their cell phones as the
    one place where they do not face these intrusions. Where they
    have control over who calls them, and to whom they give the
    number. And if there's any doubt, our customers and many of
    your constituents are reiterating loudly and clearly that they
    don't want their wireless phone numbers published. I made a
    speech in June that was widely reported in the press in which I
    said that a directory for the wireless industry was a dumb
    idea. Since then, I've received countless letters on this
    subject from customers, typically they say, ``Please keep my
    cell phone free from telemarketers and unsolicited callers.'' I
    have not received one single letter from any of our thirty
    million customers saying that they want their wireless number
    in a directory.
        It is my belief that the people who want a wireless
    directory are the people who are looking to reach somebody, not
    the people who will be reached. The Pierz Group research itself
    reports that 89 percent of wireless customers do not want their
    number listed in directory assistance service. So why are we
    jeopardizing the privacy for something customers don't even
    want? Clearly, there is no grounds or customer demand for a
    directory that would justify putting privacy in jeopardy. To
    date, the wireless industry has a strong record of proactive
    steps to preserve customers' privacy in an intrusive world.
    We've surrounded our customers' information with a wall of
    privacy, aggressively investigating and prosecuting spammers,
    deploying and updating anti-spam filters, and fighting to make
    telemarketing solicitation calls illegal. Why would we want to
    tear down that wall after spending the last two decades
    building and fortifying it? Verizon Wireless does not view the
    proposed opt-in approach as a solution. We are concerned that
    customers will see ``opt-in'' as a disingenuous foot in the
    door leading to opt-out clauses and fees for not publishing
    numbers. Further, opt-in is an all or nothing proposition, it
    does not give customers any control over how and to whom their
    information is revealed. To date, the wireless industry has
    been a great American success story for consumers and for the
    economy, how fast and far the story continues in our third
    decade of operation depends upon the wireless industry
    remaining vigilant keepers of the privacy frame, while building
    more capacity, adding more advanced services in wireless
    products to our consumers, and also, I would encourage
    regulators, especially at the state and local level to allow
    the vibrant, strong, competitive marketplace to work. Thank you
    very much, Mr. Chairman, I look forward to the discussion
    today, and I'll be happy to answer questions.
        [The prepared statement of Mr. Strigl follows:]

          Prepared Statement of Dennis F. Strigl, President and CEO,
                                Verizon Wireless
        Mr. Chairman, thank you for giving me the opportunity to testify
    here today and for your interest in this very important privacy issue.
    I also want to acknowledge Senator Boxer's strong interest in wireless
    privacy issues as well as my colleagues here at the table with me.
        I believe that the competitive culture of the wireless industry
    drives the decisions our industry and my company make, and warns us of
    the dangers of unnecessary and counterproductive government regulation
    of a highly competitive market such as ours.
        The wireless industry is intensely competitive, and that
    competition continues to bring extraordinary benefits to consumers. In
    addition to the six national carriers, several regional carriers as
    well as countless local providers compete head-to-head every day.
    Ninety seven percent of mobile customers can choose between at least
    three wireless carriers, and thirty percent of the population has a
    choice of 7 or more providers.
        The wireless industry continues to introduce innovative pricing
    plans and service offerings, invest in and upgrade network performance
    and add new capabilities. Subscriptions are up, airtime use is up, and
    consumers have found text messaging and mobile entertainment
    applications to be quite popular. This Committee can take much of the
    credit for this level of competition, because in 1993 and again in
    1996, you decided that our industry should be a model for deregulation
    and you prevented others from applying traditional rules and
    regulations to our operations. Coupled with advances in technology, and
    additional spectrum availability, your decisions have led to a
    resounding competitive success story.
        The industry's implementation of Local Number Portability or LNP
    last year has facilitated the choices our customers now have. In
    effect, LNP has become the ultimate form of wireless consumer
    protection, because it has removed the major deterrent to changing
    companies. If a consumer is unhappy, he or she can take their phone
    number and their wallet and go elsewhere. If anybody needs proof of
    that, look no further than the losses some carriers experienced after
    Nov. 24 of last year, when LNP took effect.
        Within the last year, LNP took an already competitive market and
    made it hyper-competitive. Companies are under a brand new microscope
    and must compete as never before. Differentiation has been magnified,
    and pricing, network quality, handset selection, customer service, new
    features like camera phones, and billing practices are central to a
    customer's carrier selection decision.
        With carriers now focused on differentiation--because that is the
    best way to respond to customer demands--it would be counterproductive
    to inject a governmentally mandated ``sameness.'' Instead we must trust
    the market to do its job and encourage choice, differences and
    innovation, and capital investment.
        In all, I believe the wireless industry is a great American success
    story--for consumers and the economy. In just two decades:

       wireless consumer prices have dropped like a rock

       choices in carriers, services have burgeoned

       we've built a brand new industry, from scratch, into one of
            the drivers of the American economy.

        But against that backdrop, I think we're missing the boat on
    creating a Wireless Telephone Directory. It's a subject that's
    controversial not just with customers, but within the wireless
    industry.
        We at Verizon Wireless think a Wireless Telephone Directory would
    be a terrible idea, and we will not publish our customers cell phone
    numbers or otherwise participate in the plan you have heard about
    today.
        Here's why we will not participate in a directory assistance
    program: Since we started this business, we have not published our
    customers' wireless phone numbers. We did this consciously, for the
    sake of preserving customers' privacy and control over their bill and
    discouraging interruptions from unwanted calls. We do not believe those
    basic reasons have changed.
        In fact, we see more reason today than ever to protect customers'
    privacy. The floodgates are open to spam, viruses, telemarketing and
    other unwanted, unsolicited messages on landline phones, computers and
    in mailboxes. We think our customers view their cell phones as one
    place where they don't face these intrusions, where they have control
    over their communications.
        And if there's any doubt, our customers--and some of your
    constituents--are reiterating loudly and clearly that they don't want
    their wireless phone numbers published.
        I have received countless letters on this subject from our
    customers. Typically they all say, ``I find your stance to be grounded
    in integrity . . . please keep my cell phone free of telemarketers and
    unsolicited callers.'' I have not received one letter that urges me to
    put the customer's number in a wireless directory. Clearly, there is
    not a groundswell of customer demand for a directory that would justify
    putting privacy in jeopardy.
        To date, this industry has a strong record of proactive steps to
    preserve customers' privacy in an intrusive world. For example:

       The wireless industry fought to make auto-dial and
            telemarketer solicitation calls to wireless phones illegal.

       My company and other carriers have been aggressively
            deploying and updating anti-spam filters.

       Moreover, we have aggressively investigated, disabled and
            prosecuted illegal spammers.

        We recently determined a source of illegal SPAM to our customers
    and obtained a permanent injunction against this Spammer.
        Further, the Verizon Wireless' do-not-call, do-not-mail, do-not-e-
    mail lists, and soon our do-not-SMS list, exceed requirements
    established by the Federal Trade Commission's do-not-call registry.
        Our industry has surrounded customers' information with a wall of
    privacy. Why would we want to tear down that wall--that unique
    advantage--that we have spent two decades fortifying?
        The old business adage that the ``customer is always right'' is not
    some old-fashioned way of doing business that has become at odds with
    present-day business models.
        Instead it is a basic tenet that remains rooted in sound business
    sense. In the end, no matter what business you're in, pleasing
    customers is more profitable than not pleasing them.
        Verizon Wireless does not view the ``opt-in'' approach as a
    solution. We are concerned that customers will see opt-in as a
    disingenuous foot-in-the door-leading to ``opt-out'' clauses and fees
    for not publishing a number. Further, ``opt-in'' is an all or nothing
    proposition; it does not give customers any control over how and to
    whom their information is revealed.
        Our plan at Verizon Wireless is straightforward.
        First, we do not, and will not publish or make available our
    customers' wireless phone numbers for a paper directory or a directory
    database.
        Second, we will be changing our customer contracts to proactively
    and clearly state: ``We do not provide our customers' phone numbers for
    listing in directories.'' That change will eliminate any ambiguity
    concerning our current practice of preserving customers' privacy and
    our intentions for the future.
        Earlier I observed that wireless has been a great American success
    story--for consumers and the economy. It's a brief history, punctuated
    by:

       Consumer prices dropping like a rock

       Choices going up

       Building a new industry from scratch into one of the drivers
            of the American economy

        How fast and far the story continues in our third decade, depends
    on:

        The wireless industry remaining vigilant keepers of the privacy
    flame while building more capacity and adding more varied and better
    services to our wireless products; and

       Regulators, especially at state and local level, allowing
            the vibrantly strong competitive marketplace to work.

        Thank you very much, Mr. Chairman. I look forward to the discussion
    today and I will be happy to answer any questions.

        Senator Allen. Thank you, Mr. Strigl for your testimony,
    I'm sure there will be questions. Senator Ensign, did you want
    to make an opening statement?

                    STATEMENT OF HON. JOHN ENSIGN,
                        U.S. SENATOR FROM NEVADA

        Senator Ensign. I'll keep it very, very brief. Just to make
    a couple of points here. I don't know that there's any place or
    any industry in America that has stronger market forces at work
    than in the cellular telephone industry. And I would say that,
    I think there's pretty good evidence out there to back up that
    statement. Having made that statement, I don't know why we
    would want to put more government on more industry. It would
    seem to me that if people are afraid that somebody's going to
    force somebody into a directory, that you have somebody like
    Verizon saying, ``We're not going to do that.'' And, if there
    are people out there that say, ``I don't want to be part of
    that, and I don't want to have anything to do with that,'' if
    you were a company that was going to require or start charging
    your customers for, say for instance, not being put on that
    list, then those customers would have a tendency to migrate
    toward a company like Verizon who is not. The market is going
    to take care of this problem if we just let it. This is
    legislation, we're legislating looking for a problem, instead
    of just letting the market take care of it. I just think it's
    kind of ridiculous that we are even thinking about putting
    legislation forward on this particular issue. The idea of you
    all doing what you want to do and letting the market forces
    determine that and let the customers determine where their
    dollars go would seem to make the most sense to me, so Mr.
    Chairman, I will vigorously oppose this piece of legislation,
    and I appreciate you chairing this hearing.
        Senator Allen. Thank you, Senator Ensign. Senator Brownback
    did not want to make an opening statement, but make a statement
    for the record and, so ordered.

                   STATEMENT OF HON. SAM BROWNBACK,
                        U.S. SENATOR FROM KANSAS

        Senator Brownback. Thank you for holding this hearing, it's
    a great hearing to be held, and I hope we can really look at
    this issue in some real depth, I've got an opening statement
    that outlines the position, because I think it's going to be a
    key one for us to wrestle with. Thank you.
        [The prepared statement of Senator Brownback follows:]

       Prepared Statement of Hon. Sam Brownback, U.S. Senator from Kansas
        Thank you, Chairman McCain, for holding this hearing.
        The Wireless companies' plan to offer a 411 Directory has been a
    heated topic in the past few months as speculation over its possible
    structure has appeared in news report and op-ed pieces throughout the
    country.
        Understandably, there is a residual fear among consumers resulting
    from the ongoing battle against telemarketers in the landline world.
    Many ask, would a wireless directory expose the millions of cell phone
    users to an even worse type of unwanted commercial call--one that eats
    up their minutes?
        I would like to thank Senator Barbara Boxer for introducing her
    legislation and with it raising the public debate over this pending
    directory. I would also like to welcome Senator Specter for coming hear
    this afternoon to share his concerns on the issue with this committee.
        While I commend the good intentions of this bill's authors, as a
    Co-Chairman of the Senate Wireless Caucus, I would like to caution this
    committee. I think we should take a very careful approach to
    legislating in this area.
        I am pleased that the wireless industry has responded to every
    criticism raised to date. They have committed to provide a 411-like
    service that will be completely ``opt-in'' with no charge for those
    customers who do not wish to be listed. This is different from the
    wireline industry, where you have to pay to keep your name out of the
    phone book. They have also established that the wireless directory will
    not be published and that the names and numbers will not be sold to a
    third parties.
        Wireless companies have an excellent track record on privacy and
    have every incentive to keep their commitments. As you know, wireless
    is an extremely competitive marketplace. Moreover, the newly
    implemented wireless number portability makes changing carriers these
    days even easier. If a carrier were to break their promise and
    compromise their customers, loss in business would be swift and
    certain.
        Our goal should be to ensure that we do not unintentionally make
    the legal burden too onerous for the wireless companies so that we
    create disincentives to establishing a 411 directory. As more and more
    Americans ``cut the cord'' and rely exclusively on wireless, consumers
    are demanding this service. It would be wrong for government to step in
    hastily and unnecessarily, when there is not yet a problem to fix.
        Of particular concern to me is Section 3(C) of the bill that
    requires a very specific call forwarding protocol. There is concern
    that this protocol is proprietary to a particular company. As written,
    this might be picking winners and losers, which government should not
    do. I urge a careful review of this section.
        Thank you again Chairman McCain for holding this hearing. I look
    forward to hearing from our distinguished Panel this afternoon. I offer
    a special welcome to CTIA's new President, former Congressman Steve
    Largent. It is good to see you back on the Hill.

        Senator Allen. Thank you, Senator Brownback. Ms. Pierz,
    thank you and all other witnesses for your forbearance. If you
    would please proceed.

      STATEMENT OF KATHLEEN A. PIERZ, MANAGING PARTNER, THE PIERZ
                               GROUP, LLC

        Ms. Pierz. Thank you, Mr. Chairman, distinguished Members
    of this Committee.
        I was invited here today to present some key findings from
    a consumer survey that the Pierz Group just completed. We
    surveyed 1,500 of three cell phone providers regarding their
    willingness to list their cell phone number, and their opinion
    of various privacy protections that could be put in place.
        The message that I have for the Committee today is simple.
    Better communications and privacy are not mutually exclusive. I
    believe that consumers should have both, and they want both.
    Half of all the telephones in the United States today are now
    mobile phones. Those are largely unlisted, and in spite of all
    the technological innovation that we've seen in the
    telecommunications area, directory assistance today remains
    unchanged from the way it was in the 1950s, and there is really
    very little that has happened in that time. The ways that we
    have communicated with each other, and all the devices that we
    have today, have changed dramatically. It may come as a
    surprise to the Committee, and it would be rather a shock to a
    lot of consumers to learn that there really is no specific
    privacy protection for cell phone numbers today. In fact,
    almost all mobile subscribers have already signed a contract,
    as was mentioned, that gives the specific, express permission
    to be included in a directory, and consumers are not aware of
    this stipulation today. And with number portability in place,
    you now also face the possibility that you could divulge
    someone's lifetime telephone number without their consent,
    unless we have specific privacy protections in place.
        So, what do consumers want? We learned that a majority of
    consumers want wireless directory assistance, however, nearly
    all consumers want privacy protections in place to protect
    their cell phone number. The stronger the privacy protections,
    and specifically the protections that are mentioned in this
    bill, the more likely consumers are to opt-in to a wireless
    directory. We found that with these types of privacy
    protections, as many as 62 percent of consumers will be willing
    to list their number in directory assistance. Consumers rely on
    their mobile phones.
        Today, almost 10 percent, which means 16 million mobile
    subscribers told us that they do not have a home phone anymore,
    just a mobile phone. And if you look at adults who are 18 to
    24, that number increases to almost 22 percent, they only have
    a mobile phone today. We asked consumers why they would like to
    have their numbers listed. Seventy-six percent said, ``I can
    find people when I need them, or in an emergency.'' And we know
    from past research that almost everyone can think immediately
    of a situation where they needed to reach someone, or needed to
    be reached on their mobile phone and couldn't do so. This is a
    top of mind communications issue for consumers. When we asked
    consumers what concerned them most about being listed, 28
    percent said their overall privacy, and an additional 28
    percent said that they were concerned about calls that they
    didn't want, or calls from people that they didn't know.
        In the survey we tested some specific options for privacy
    protections. Under the proposed CTIA plan, consumers will list,
    however with specific additional privacy protections where the
    number is never given out, or printed on a phone bill, and
    where consumers can actually know who's calling them, so they
    can take that call, or not, based on their choice. You can get
    over 60 percent of people to list in a data base. This is an
    important number, because 60 percent represents critical mass
    in the database in terms of being a value to consumers, and to
    carriers. Consumers clearly want privacy protection. Especially
    because they believe that they have that protection today. I
    would argue that most wireless carriers would like to be able
    to give consumers more privacy protection, so what's stopping
    us? Why can't we get to that point? In a perfect world it would
    be easy, but much like the issue of local number portability,
    no one carrier can do this alone because a call is completed
    over different networks. There is no particular market
    incentive in place to protect a consumer's privacy, and that's
    where we've seen a breakdown in market forces. Wireless
    carriers, even as a group, as an industry, can't force other
    carriers to mask numbers or protect consumer privacy. And,
    there is no particular market incentive for them to do that.
    So, if wireless directory assistance can be done right,
    everyone wins. Consumers, small businesses, fixed line
    carriers, and wireless carriers. We can do better than just
    listed and not listed. It's not rocket science from a
    technology perspective, but it is complicated from an industry
    cooperation point of view. If the Committee can achieve this,
    and protect mobile numbers and allow consumers to control their
    own privacy, will ensure the greatest value is derived from
    this process for everyone. And it will be a pro-privacy and a
    pro-competitive move. Thank you.
        [The prepared statement of Ms. Pierz follows:]

          Prepared Statement of Kathleen A. Pierz, Managing Partner,
                              The Pierz Group, LLC
        Chairman McCain, Ranking Member Hollings, and other distinguished
    members of this Committee, thank you for inviting me to address you
    this afternoon. I would like to request that my full written testimony
    be submitted for the record.
        My name is Kathleen Pierz. I am the Managing Partner of The Pierz
    Group, an independent consulting firm serving the Information Services
    industry with a special focus on the very narrow niche of directory
    assistance. Our clients are fixed line and wireless carriers, directory
    assistance (DA) providers and technology companies around the world. I
    have been involved in this industry for 17 years, having worked in
    information services at Ameritech (now SBC) and IBM. I now consult to
    the industry and have authored more than one hundred reports and
    articles on the subject of directory assistance and databases.
        Half of all telephones in the U.S. are now mobile phones. The issue
    of adding cell phone numbers to directory assistance is an important
    one for consumers and for businesses. The message I have is simple:
    Better communications and privacy are not mutually exclusive; consumers
    can have both.
        What the Committee is addressing today is the fact that there are
    no guarantees, no legal construct that give consumers the privacy
    protections they want (and think they have today). I was invited here
    today to present key findings from a recent independent national
    consumer survey of 1,503 cell phone subscribers conducted by The Pierz
    Group in July and August of this year. The purpose of this independent
    research was to establish consumers' willingness to list their wireless
    phone numbers in directory assistance and under what specific
    conditions. In addition, I have published three other major reports in
    the past 18 months about the opportunity to add mobile numbers to the
    DA database in countries where they are not included today.
        As an analyst, I write regularly about the fact that U.S.
    information services, whether from 411, print phone books or online
    services have lagged well behind our communications infrastructure. DA
    in the U.S. today has changed little since the 1950s, but the ways in
    which we communicate have changed dramatically. DA databases contain a
    single fixed-line phone number and a billing address. Mobile phones as
    well as many other methods of communication now play a major role in
    our daily lives, yet there is no way today to reach a mobile subscriber
    without knowing the number, through DA or any type of directory. In
    addition, e-mail addresses, Instant Message (IM) addresses, SMS codes,
    fax numbers, pagers, website URLs etc, like mobile numbers, are all
    unavailable unless the owner gives them to you, and you have them when
    you need them.
        Nearly 53 percent of all phones in the U.S. are now unlisted. That
    figure includes the roughly 20 percent of all fixed-line numbers that
    are unlisted (roughly 33 percent of residential numbers are unlisted)
    and the 97 percent of wireless numbers. (Some cell phone numbers are
    listed because incumbent wireline carriers permit them to appear in
    their white pages--for a special fee.) By contrast, in Scandinavian
    countries between 85 percent and 95 percent of all phone numbers
    (wireline plus wireless) are listed. In these countries, between 20
    percent and 25 percent of DA calls request a mobile number. In the
    U.S., mobile phone numbers are not available through DA; in fact,
    wireless numbers are not even available to emergency workers in life-
    and-death situations.
    Mobile numbers are not private
        It may come as a surprise to the Committee--and to many consumers,
    I'm sure--that today there is no specific privacy protection in place
    for mobile numbers.
        The only reason your cell phone number is not publicly available
    today is because that has been the industry practice for the past 20
    years. One must also consider the fact that nearly all mobile
    subscribers, with the exception of Cingular Wireless customers, have
    already signed a contract that includes their express permission to
    have their mobile number listed in any type of directory the carrier
    may choose. Consumers are not aware of this stipulation in their
    contracts.
    LNP: An additional factor
        The need for consumer privacy protections becomes more significant
    in the wake of the new Local Number Portability plan. LNP means that
    cell phone users can keep their numbers when they change carriers--
    indeed, one number for the rest of their lives. Think of the
    difficulties consumers would face if these ``lifetime number'' were
    divulged without their consent. So, LNP makes it more important to
    protect consumers' expectations of the privacy of their cell phone
    numbers.
        To translate these broad concepts into actual consumer experience,
    we surveyed more than 1,500 consumers in July and August. We asked them
    detailed questions about their privacy expectations on cellphones and
    what they want, and don't want, from a cellphone listing in directory
    assistance. I would like to summarize those findings for the Committee.
    What consumers told us:
        Many consumers want to be able to contact each other on their
    mobile phones. Nearly all consumers want to have some privacy
    protection built into that contact process. Because mobile phones are
    considered to be more personal, they are more likely to be answered any
    time or anywhere. For these reasons--and because they have been
    unlisted in the past--consumers expect a higher level of privacy for
    their cell phone number.

       With privacy protections, a majority of consumers will list
            their cell phone numbers. The stronger these privacy
            protections, the more willing consumers are to list:

         Eleven percent of consumers (about 18 million wireless
                subscribers) will list their cell phone numbers without any
                type of privacy protection at all. This number is up 500
                percent over the number of consumers who said they would
                list (2 percent) under these circumstances in July of 2003.

         Fifty-two percent of mobile subscribers (about 84
                million wireless subscribers) will list their numbers if at
                least some type of privacy protection is provided.

         With the most comprehensive privacy protections, up to
                62 percent of consumers (over 100 million wireless
                subscribers) would be willing to list the cell phone
                numbers. Given the fact that roughly 67 percent of
                residential numbers are listed today, this is a very high
                number.

         Creating a process to easily add cell phone numbers to
                the National Do Not Call Registry in conjunction with
                privacy protections would make 47 percent of consumers more
                willing to list their cell phone numbers. This, of course,
                is easily accomplished.

         Our research shows that consumers could expect an
                average of three to five additional calls per year to their
                cell phones as a result of having their wireless number
                listed. This is of course an average. Many will get no
                calls from DA, some will get more.

         If consumers had to pay for the incoming calls (and
                some carriers may not require that), an additional three to
                five calls per year would have little cost impact to
                consumers. These new calls would generate an additional
                average expense of $0.45 per month, or 1/100th of a typical
                monthly wireless phone bill.

         Consumers are not aware of the provisions in their
                current wireless contracts that gives express permission to
                list their numbers in a directory.

         Caller ID functions do not necessarily identify a
                calling party. If a phone number is unrecognized by a
                consumer, there is no way to know who is calling. In
                addition, a significant percentage of calls to mobile
                phones today are shown as ``incoming call'' with no number
                or name available.

       Why do consumers want to have cell phone numbers available
            through DA?

         These answers were very concentrated and consistent.
                Seventy-six percent said, ``I can find people when I need
                them or in an emergency.''

         Other popular answers were, ``people can find me'' and
                ``it would help me do my job.''

         9.6 percent of all mobile subscribers (almost 16
                million people) report having no home phone; only a mobile
                phone

         More than twice as many (21.8 percent) people between
                18 and 24 years old have only a mobile phone.

       What worries consumers about listing their cell phone
            numbers?

         Twenty-eight percent said, ``overall privacy.''

         Twenty-eight percent said, ``calls from people I don't
                want to talk to.''

         Twenty-five percent want to avoid telemarketing (which
                is already prohibited, although consumers are not aware of
                this). It should be noted that in a 2002 study conducted by
                privacy expert Dr. Allan Westin, 88 percent of consumers
                said the number one reason not to list their mobile number
                was fear of telemarketing calls. It is clear that consumers
                believe that the Do Not Call Registry works and could
                protect their mobile numbers as well.
    What privacy protections do consumers want?
        Our consumer research project tested five different privacy
    options, all of which could in theory be implemented today--I say in
    theory because some would require that all telephone services
    providers, both fixed and wireless, adopt appropriate technologies and
    standards and privacy protections to achieve this end. This would
    obviously generate costs for carriers, but more importantly it means
    that all carriers would need to agree to and implement these privacy
    protections. It is these difficult coordination problems that have
    stymied parties on all sides.
    The CTIA Plan
        The CTIA, which is working to assemble a national wireless
    database, holds some sway with its membership and can ask them to
    cooperate--but ``ask'' is the operative word here. The CTIA cannot
    obligate anyone--especially fixed line carriers. The CTIA plan includes
    what might be called a least common denominator for privacy protection;
    it covers those aspects the organization can ensure within the process.
    Under the CTIA plan, wireless numbers will be put into a DA database.
    This national database won't be sold to anyone, won't be published in a
    print directory and will not appear on the Internet. Some consumers
    will list under this plan. Our research shows that 26 percent would
    list right away and an additional 27 percent would list once they had
    an opportunity to see this plan in place and be convinced that it
    works. This provides for 53 percent of consumers to eventually list
    their wireless numbers. That is certainly a good start but is still
    somewhat short of critical mass (0ver 60 percent listed) in order to
    create a robust and effective service.
        As explained below, two of the five privacy protection plans
    (``Preannouncement'' and ``Listed for Messages Only'') did test better
    with consumers than the CTIA plan. Both involve more aggressive privacy
    plans and actually allow consumers to control, to a caller, who can
    reach them. Our research shows that these additional privacy
    protections increase the number of subscribers who would list their
    mobile numbers right away by 61 percent.
    Preannouncement
        This option refers to the practice of the call recipient hearing
    some sort of announcement that a call is coming in from a wireless DA
    user. Callers wishing to reach a mobile subscriber would record their
    names at the prompt and would be connected to the mobile subscriber.
    The cellular customer would hear the name and could say ``accept,''
    ``reject'' or ``voice mail'' to manage a call from directory
    assistance. This option tested well because under this plan the phone
    number would not be given out and subscribers would have control over
    who could reach them on the mobile phone. Under this plan, 36 percent
    would list immediately and an additional 23 percent would list later.
    This option would allow almost 60 percent of cellular subscribers to
    list their numbers with confidence.
    Listed/Not Listed/Listed for Messages Only
        A listed/not listed/listed for messages only option also tested
    very well. This scenario gives wireless subscribers a third option. If
    they were listed for messages only, they would not get any calls from
    directory assistance, but would have a message sent to them with the
    name and number of the person trying to reach them. They could then
    return the call or not, as they chose. Like the preannouncement option,
    this privacy protection option gives consumers control over who can
    reach them. Thirty-eight percent would list now, with an additional 24
    percent would be willing to list later, allowing 62 percent to
    eventually list their numbers. This is consistent with the roughly 67
    percent of listed residential numbers today.

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Source: The Pierz Group, 2004

        Consumers want to use DA to get mobile numbers and are, in large
    part, willing to list their wireless numbers--but only if they can
    control who can reach them. In the simplest terms, consumers want to
    receive the calls they want, and don't want to receive calls they don't
    want. They want and expect to be able to maintain some level of
    privacy. The wireless industry and fixed line DA providers stand to
    earn a projected $2 to $3 billion a year in additional revenues from
    incremental DA calls and additional minutes of wireless usage. Putting
    mobile numbers in the DA database is good for consumers and good for
    the industry, but only if done right. ``Right'' is what consumers say
    it is, the vast majority do not want their number given out (they want
    calls forwarded directly) and they want to maintain some control over
    who can reach them.
    If everyone wins, what are the key obstacles?
       Consumers do not have key information:

         Wireless subscribers do not know they have signed a
                contract allowing their number to be put in a directory.

         There is no additional, specific legislation or
                regulation that dictates how mobile numbers can be used or
                listed.

         Consumers do not know what types of privacy
                protections are planned or could be put in place.

         Wireless subscribers do not know that they are already
                protected from unwanted commercial contact (telemarketing)
                on their cell phones (see FCC Report & Order 47 CFR,
                section 64.1200, Subpart L).

       Consumers use their mobile phones in different ways and have
            different expectations. Many will list, some will not. For some
            consumers the mobile phone is a safety device kept in the glove
            box; for others it is a vital communications tool and the only
            phone they have.

       It is extremely difficult for fierce competitors,
            particularly across wireless and fixed line industries, to
            agree to a plan to protect privacy of cell phone numbers
            without some requirement to do so. They have different
            incentives, business strategies and models, and they have
            different systems and technologies in place to manage their
            businesses.

       Carriers have a broad array of different and in many cases
            aging billing systems--these would have to be modified to avoid
            divulging mobile numbers and to provide accurate Caller ID
            information. This would require some additional investment and,
            again, a need for carriers to meet specific privacy
            requirements.

       If numbers are masked but not in a manner (such as with
            credit cards, e.g., 202-123-XXXX) that gives consumers
            sufficient information, carriers are concerned that service
            costs could climb when consumers call to contest DA charges for
            numbers they can't see.
    Why should Congress care about wireless DA?
        Based on my research with consumers and my observation of the DA
    sector and the telecommunications industry more generally, I see two
    principle reasons why Congress should care about wireless DA:
    1. Protecting consumers' privacy expectations
        As my research plainly shows, consumers value the privacy of their
    cell phone numbers. Consumers think that they have protections today
    against unauthorized release of their cell phone numbers. Many
    consumers would be shocked to learn that there is no law or rule
    protecting release of their cell phone numbers. Most consumers--not all
    of course--are interested in getting calls through directory assistance
    if they can retain control over who can reach them on their wireless
    phones. Thus, the bill before the Committee protects twenty years of
    consumers' expectations.
    2. Improving the value of the network for everyone
        This Committee is certainly familiar with the economic principle
    that additional users of the telephone network create benefits for
    everyone--the marginal user as well as everyone already on the network.
    Indeed, this powerful theory underlies our universal service policies
    and has served our country very well. That same analysis, however,
    applies with equal force to wireless. Consumers using wireless
    telephone service create networks in which subscribers benefit from
    additional persons being accessible on the network. Policies that
    expand use of the network and the accessibility of additional persons
    yield positive and direct network effects for all consumers in the
    market, and in fact for carriers.
        As noted above, however, the wireless area is more complex because
    one has to factor in the privacy issue--not everyone wants to be
    reached and most consumers do not want to have their cell phone numbers
    divulged. And that is where we see an issue. It is not at all clear
    that all the carriers involved in a wireless call (fixed phone to a
    mobile phone, or mobile phone to mobile phone) have the incentive to
    protect the privacy of the telephone number if a subscriber wants to
    keep it private. Consumers should have a choice that goes beyond simply
    having their cell phone numbers listed (everywhere) or not listed.
    Every consumer with an unlisted home number readily admits to missing
    calls they really want to receive, but they are willing to live with
    that problem to avoid calls they don't want to receive. Likewise,
    consumers can readily identify situations where they needed to reach
    someone or to be reached themselves on a mobile phone and it was not
    possible. There are of course people who do not want their mobile
    numbers in a DA database, even if the number was not divulged to
    callers. They should absolutely be able to rely on this protection, and
    know that their numbers can remain unlisted.
        We can do better; this is not rocket science from a technological
    point of view, but it is complicated from an industry implementation
    point of view. We have seen this complication in the huge efforts by
    the CTIA to establish a wireless database that provides some level of
    privacy for consumers. Even so, the largest wireless carrier in the
    country is no longer willing to participate in this process based on
    what it sees as inadequate privacy protections. I do take issue with
    the comments of Verizon Wireless' president in the press that adding
    mobile numbers to DA is a ``dumb idea.'' Done right, with the privacy
    protections and the choice consumers expect, it is a good idea and
    benefits consumers, carriers and many small businesses.
        Ultimately, whether or not legislation is required to ensure
    consumer privacy becomes a question of political philosophy. Adding
    regulation to a successful and highly competitive industry is a
    difficult choice. It is one, however, that will promote privacy
    interests by ensuring that consumers have control over their cell phone
    number and that this privacy decision is respected by all carriers,
    whether wireless or fixed line. At the heart of this decision is the
    fact that this issue crosses two completely separate industries, fixed
    line carriers and wireless carriers, who to some degree compete with
    each other. The wireless industry could collectively agree to mask
    mobile numbers and not disclose them. However, if even one fixed line
    carrier does not provide this same number-masking capability and prints
    mobile numbers on its billing statements, the numbers are not masked
    and not private. Similarly, one carrier could offer the more aggressive
    privacy options: listed for messages or preannouncement privacy
    protection, but that will not work unless all providers in the fixed
    and wireless industry agreed to provide the same privacy protection
    option(s). We have two industries and hundreds of carriers (fixed and
    wireless) that must coordinate privacy protection policy to achieve
    this end for the benefit of consumers. To date, these efforts have
    fallen short of what consumers expect.
        If the Committee can accomplish those two objectives--protecting
    privacy and ensuring that the greatest value is derived from this
    process for everyone (consumers and carriers)--then it will accomplish
    much.

        Senator Allen. Thank you, Ms. Pierz, I'm sure there will be
    more questions for you as well. Thank you for your testimony,
    we'd now like to hear from Mr. Cox.

             STATEMENT OF PATRICK A. COX, CEO, Qsent, INC.

        Mr. Cox. Thank you, Mr. Chairman and Members of the
    Committee, I appreciate you having me here to testify today. I
    want to talk through how the proposed wireless 411 service
    would work, talk about the privacy protections in place for it,
    and maybe speak to the value of a directory, as well.
        Qsent's commitment to privacy and consumerchoice has landed
    it in the position where six carriers, which is Alltel,
    Cingular, AT&T Wireless, Nextel, Sprint and T-Mobile are
    planning on launching a wireless 411 initiative with a company
    aggregating that content and putting it out into the
    marketplace. More specifically, to create one single service,
    where these numbers will be available through traditional
    existing 411 service infrastructure today. The way the service
    is going to be designed is to ensure that consumers have a
    choice, and that their privacy is protected. It will not be
    available in a printed directory, it won't be electronically
    distributed, it won't be on the Internet. This is actually what
    we call, dynamically protected privacy data base, which means
    that every time a call comes in for an operator services
    company, then and only then will the phone number be displayed,
    and it won't be stored, it won't be kept by the operator
    stationed, it will just be permission for the single call. If
    an individual chooses not to be included, their listing will
    not be made available in any form on this service. The current
    media misperception is that every subscriber would be included
    in the 411 data base, this is not a realistic option, and in
    fact is not what would be happening. For example, if we did
    that, there would be judges, law enforcement personnel,
    celebrities, children included in this data base, and that
    would create a trust problem, it creates a privacy problem, a
    lot of business risk for carriers to do that, that is not the
    plan, this truly is going to be an opt-in. The data base, day
    one, starts at zero. A carrier's greatest asset is its
    customer. And so, I think there's no better way to take care of
    that customer and create trust than giving them choice. On how
    they control and how they display their personally identifiable
    information. So Qsent and its participating carriers believe in
    the following principles, and we think this also creates a very
    successful service: the right to choose, the right to change
    that choice, the right to security, and the right to have all
    of that without cost. That's the agreement amongst all the
    participating carriers in this opportunity here.There's a clear
    need for this for the consumer. The value of a directory.
    Eighty percent, which is a supermajority of consumers today,
    eighty percent choose to have their land line numbers included
    in voice-based 411 services. Hundred of thousands of consumers
    now currently pay their wireless carrier companies money to be
    listed in directory assistance, and to be listed in the phone
    book. There are varying value propositions, but in essence,
    personal reasons, business reasons, sometimes people want to
    stay in touch with their prospects, their customers, their
    family and their friends, and they want to choose to be part of
    this. For over eighty years, Federal and state governments have
    affirmed the belief that telephone directories are in the
    public interest. In fact, printed Yellow Pages generate
    billions of dollars in revenue from businesses which result in
    lower phone costs for consumers. According to the FCC, 50
    percent of all telephone subscriptions this year are for mobile
    service. Even a growth in dependency of the wireless phone, the
    availability of a wireless 411 service will for the first time
    create parity between the wireless and land line service
    offering, creating more competition and creating better
    consumer benefit and lower prices.For business people,
    particularly small business owners, the benefit is clear. A
    specific problem we have with the bill and it sounds like it's
    being addressed by some of the comments earlier by Mrs. Boxer
    and Senators Wyden and Smith, but there's a section C, the call
    forwarding, this method won't work, legally or technically.
    There are a lot of regulatory issues around it, a lot of
    technical issues around it. There's no existing method today
    that will positively authenticate a caller's identity. Caller
    ID on the network doesn't exist, except for just telephone
    number, you don't get name transmitted. We don't support it,
    and not only that, there are certain state and PUC regulations
    that require printed disclosure of both parties' number on
    phone bills. So, in conclusion, the legislation before us today
    will stifle innovation, and investment, and limit consumer
    choices while not adding any additional privacy protection. We
    believe that the customer is always right. And I believe you
    should give the customer a chance to allow them to choose
    what's best for them. The greatest right a consumer can have is
    personal choice and control. The wireless 411 service will
    provide this. Thank you.
        [The prepared statement of Mr. Cox follows:]

             Prepared Statement of Patrick M. Cox, CEO, Qsent, Inc.
        Good afternoon, Mr. Chairman and Members of the Committee. Thank
    you for inviting me to testify on Senate Bill S. 1963, the ``Wireless
    411 Privacy Act''. My name is Patrick Cox and I am CEO of Qsent, Inc.
    Prior to founding Qsent, I was the founding CEO of MetroOne
    Telecommunications, Inc., the first independent operator services
    company to provide 411 services to wireless phone users.
        I am here today because Qsent was selected by six of the Nation's
    leading wireless carriers to facilitate the delivery of wireless
    directory assistance information through the existing 411 providers,
    the Operator Services Companies (OSCs). Simply stated, Qsent was
    selected because these large, diverse, fiercely competitive companies
    trust us with one of their most important assets: customer listing
    information. In our current business, we've demonstrated our commitment
    to consumer choice and privacy as well as our ability in managing
    highly secure services. My company's background and expertise makes us
    uniquely qualified to work with the wireless carriers and their
    associated OSCs in making the Wireless 411 Service a success from the
    consumer's perspective.
        Mr. Chairman, you and the other members of this Committee have been
    leaders in adapting our laws to meet the changing needs of the
    information age. You recognize the importance of creating an
    environment where new technologies can be adapted to provide consumers
    with more and better services without compromising their rights and
    privacy. I am concerned that by adopting this legislation, you may
    stall technology growth and limit new consumer and business services
    that provide real value. I applaud your commitment to privacy, and at
    the same time I believe this legislation, and the bill before Governor
    Schwarzenegger in California, are based on fundamental misconceptions
    about the Wireless 411 Service. The legislation outlines ``fixes'' to
    problems that do not and will not exist, and in doing so, will restrict
    consumer choice in unintended ways.
    The Wireless 411 Service
        The Wireless 411 Service is designed to be the consumer-choice and
    privacy-protected inclusion of wireless listings in the national 411
    infrastructure, making wireless numbers available in the existing 411
    service. In fact, it will not be a directory like standard 411, but
    based upon a dynamic privacy-protected database accessible only in
    real-time for each 411 inquiry by the operator. The service is not yet
    available, but the following describes the fundamental design
    principles.
        Subscribers will be able to pre-authorize (opt-in) through their
    carrier, the availability of their wireless phone number information
    for 411 purposes. It is expected that individuals will be able to
    choose to participate in the Wireless 411 Service at any time.
        If the individual chooses to opt into the Wireless 411 Service,
    their carrier will make their listing information available for the
    privacy-protected database. When a wireless number inquiry is made, the
    data aggregator (Qsent) will provide the carrier's Operator Services
    Company (OSC) access to the data. The OSC will neither temporarily
    store nor permanently retain the subscriber information.
        If an individual chooses not to opt into the Wireless 411 Service,
    their listing will not be made available in the privacy-protected
    database. If no decision is made by the consumer to opt-in, the
    individual is automatically opted out. It is critically important to
    the success of this service that it begins with no participants and
    grows only as individuals explicitly opt-in. There is far too much
    business risk to the carriers and privacy risk to individuals for it to
    work any other way.
        Individual carriers will be responsible for outlining services and
    options to subscribers, managing the opt-in process and providing Qsent
    with the approved wireless phone number information. With their
    greatest asset on the line--customer trust--there are huge incentives
    to follow this course.
        Qsent will collect opt-in wireless listing data from participating
    carrier data sources and provide the information through each carrier's
    selected OSCs--the same OSCs that provide landline 411 today. The
    information will be placed into Qsent's dynamic privacy-protected
    database and will only be accessible by an OSC in response to a real-
    time customer query for an opted-in wireless number.
        Qsent will not create or allow to be created a wireless phone
    number directory, either printed, electronic or online, in whole or in
    part. Measures are in place, such as employee training and technical
    controls to ensure that no printed, electronic, or online directory is
    created.
    Privacy
        Protecting Privacy is a fundamental requirement for Qsent's
    business and for the Wireless 411 Service. We not only focus on privacy
    because it is the right thing to do, but also because it is good
    business practice. Wireless carriers have a crucial valuable asset, the
    trusted relationships they build with their customers. The Wireless 411
    Service will strongly support this relationship. In services such as
    Wireless 411, consumer participation is an important factor for
    success. Building trust through strong privacy principles substantially
    increases the likelihood that individuals will participate. We
    understand how privacy is personal to each of us, to our family, to
    your constituents, and to our customers. We've designed all Qsent
    services, including the Wireless 411 Service, with a foundation of
    privacy protection. The Wireless 411 Service provides the wireless
    carriers with the ability to assure consumer trust. Qsent believes the
    following principles are critical to a successful Wireless 411 Service
    and are designed into the foundation of the solution.

       The right to choose.

         A Wireless 411 Service privacy policy will be made
                available to customers in plain-English--not legalese.

         Customers must opt-in to have their phone number
                included in the service.

       The right to change your mind.

         Customers may choose to have their number removed from
                the service at any time. When they do this, no residual
                uniquely identifiable information will remain (as a result
                of having been part of the service) anywhere within or
                outside of the service.

       The right to security.

         Customer data residing in the Wireless 411 Service
                privacy-protected database will be disclosed only for the
                purpose of providing voice-accessed 411 services, and will
                not be disclosed in either printed or electronic form.

         A method will be provided for customers to have their
                numbers removed from the service or to register complaints
                about the service.

         Opt-in requires authorization of an account owner who
                is 18 years of age or older.

       The right to exercise these fundamental choices at no
            charge.

         Qsent does not charge carriers for storage of
                listings, additions, or deletions. Additionally, we
                understand that each participating carrier will not charge
                for such services.

        These four fundamental principles are built into all Qsent
    practices, into the Wireless 411 Service and into the provision of
    Wireless 411 Services at the OSCs. Qsent will make consumers' listing
    information available only as part of a real-time, individual query
    initiated by the delivery of 411 service. There will never be a bulk
    distribution of uniquely identifiable information. The OSCs will not
    store or retain the data. These efforts enable individuals and
    enterprises to control how personally identifiable information is
    disclosed to third parties in a clear and simple way.
    Consumer Benefits
        Today, about 80 percent of consumers choose to have their landline
    phone numbers listed in a directory, and there are many who now
    voluntarily list their cell phones as well. Clearly, there is a strong
    value to them in doing so, whether that value is business or personal.
    Further, in an increasingly electronic economy, directories are what
    enable networks like the Internet and e-mail to operate efficiently,
    and for consumers and businesses to gain the most value from them. Most
    importantly, directories play a key role in helping people stay
    connected. The Wireless 411 Service is an example of how traditional
    directories will evolve to deliver these same benefits in a way that
    protects privacy and preserves consumer choice.
        According to the FCC, of the 165 million cell phone users in the
    U.S. today, 20 percent consider their wireless phone to be their
    primary communications device, with 5 million reporting that their
    mobile phone was their only phone. And even more astounding, half of
    all telephone subscriptions in the U.S. this year will be mobile
    phones.\1\ Given the growth and dependency on wireless devices, a
    Wireless 411 Service will meet the growing demands of those subscribers
    who want such a service and specifically choose to participate.
    ---------------------------------------------------------------------------
        \1\ The Pierz Group, ``Adding Mobile Numbers to the U.S. Directory
    Assistance/Enquiry Database,'' Kathleen A. Pierz, July 30, 2004, pp. 13
    -14.
    ---------------------------------------------------------------------------
        For business people, particularly small business owners who are
    mobile such as real estate professionals, contractors and consultants,
    the benefit is clear. For personal safety, consumers may also choose to
    participate in order to be contacted in an emergency situation wherever
    or whenever it occurs. This could be a teenager searching for a
    parent's forgotten cell number after a roadside accident or a frantic
    parent in a emergency trying to contact a child who is with a friend's
    family.
        Finally, for the large and growing number of individuals,
    particularly young people for whom their cell phone is their only
    phone, participating in the Wireless 411 Service will be their means
    for people to find them--their means to be both mobile and available,
    if they so choose.
        So why don't more wireless subscribers choose to be listed in
    traditional 411? The answer; it's difficult, costs money and opens them
    up to unwanted calls because it isn't privacy protected. In fact, a
    telemarketer who gets a directory today has no way of knowing which
    listings are cell phones if they want to specifically avoid calling
    them. With the Wireless 411 Service, the consumer benefits are realized
    while the negative consequences have been designed out.
    Legislation
        Let me share with you my thoughts on the proposed legislation
    specific to what I expect to be the practical affect on consumers and
    businesses.
        The Wireless 411 Service is a natural evolution of an increasingly
    pervasive technology. The idea of adding the capability for a cell
    phone user to call 411 for service assistance in reaching another
    subscriber who has chosen to be listed seems a natural course in the
    innovation of wireless technology. The design of the Wireless 411
    Service was developed with consideration for the existing consumer
    privacy laws already in place.
        Today, there are a number of consumer privacy laws designed for
    landline phones that cross-over to protect wireless consumers. These
    include: the National Do Not Call Registry, CAN SPAN Act of 2003 and
    the Telephone Consumer Protection Act of 1991 (TCPA). As of June 2004,
    62 million numbers were on the Do Not Call list. This has proven to be
    an effective means to screen out telemarketing calls. The TCPA
    prohibits all autodialed calls to wireless phones, whether it is a
    marketing call or not. The CAN SPAM Act and the rules recently
    promulgated by the FCC prohibit unsolicited commercial messages to
    wireless phones and pagers, providing yet another layer of protection
    for the consumer. The Wireless 411 Service is compatible with, and in
    fact can help with the compliance of these laws.
        Section (C) CALL FORWARDING of the Wireless 411 Privacy Act appears
    to be an attempt to ensure that callers only receive desired calls, but
    the method mandated in this legislation will not allow that to occur.
    First, accepting or rejecting the notification of an unwanted call is
    no less invasive than receiving the call but not taking it. Second,
    there is no method or technology available to effectively authenticate
    the identity of the caller; therefore, it would be relatively easy for
    someone to claim a false identity in order to get through. The
    inability to authenticate the true identity of a caller to a cell phone
    stems from the fact that there is no technology that displays the
    Caller ID name for an incoming call to a cell phone. The name can only
    be displayed if the name already exists in the personal address book in
    the cell phone. Therefore, there is no way to notify the user of the
    caller's identity before the call goes through. Third, certain state
    PUC regulations may require detailed call billing. If the goal of call
    forwarding is to obscure the number, that couldn't be accomplished
    because the wireless number would appear on the call detail reports.
        Eventually, many technology companies will develop competing
    products that will allow you to only receive calls from certain people
    or allow the true integration of caller ID for cell phones. Consumers
    have the right to choose these service offerings. Consumer choice
    should not be constrained by Congressional legislation.
        The Wireless 411 Service will have a dynamic privacy protected
    database from which no printed or electronic directory will be created.
    However, the pending legislation calls for the prohibition against any
    future published directory. I do not believe this service should be
    strictly prohibited through legislation simply because subscribers
    themselves may find that they want to put their wireless phone number
    in the white or yellow pages, as millions of businesses do today.
    Conclusion
        We've designed the Wireless 411 Service to ensure that consumers
    know their information will be secure and private. Most importantly,
    the greatest protection a consumer can have is personal choice. The
    Wireless 411 Service will provide this. The legislation before us today
    will stifle innovation and limit consumer choice while not adding any
    real privacy protection.
        Thank you.

        Senator Allen. Thank you, Mr. Cox, we'd now like to hear
    from Congressman Largent.

                    STATEMENT OF HON. STEVE LARGENT,

      PRESIDENT AND CEO, CELLULAR TELECOMMUNICATIONS AND INTERNET
                              ASSOCIATION

        Mr. Largent. I ask that my entire statement be submitted
    for the record.
        Senator Allen. It is so ordered.
        Mr. Largent. Thank you. Let me begin first of all with the
    building question in my chest, and that is, why does a
    competitive, vibrant industry have to come before Congress to
    ask permission to offer a new service to its own customers? Is
    there a presumption in Washington that the government cares
    more about wireless customers than wireless carriers do? I
    would say the answer to that question, the second question, is
    no. Mr. Chairman, this is my first opportunity to testify
    before the Senate as the spokesperson for the wireless
    industry, and I can tell you that the world looks a little
    different on this side of desk, and I'm happy to be where I am,
    and I'm happy that you're where you're at.
        I want to offer, if I can, just a few brief comments about
    the wireless directory assistance, but I want to begin by
    talking about the industry that I'm very proud to be associated
    with. The wireless industry has a tremendous story to tell, and
    I'm going to try to tell it in just a few brief minutes. Let's
    look at the picture of the wireless industry, just in the last
    10 years, from 1993 to 2003. In 1993, the year that Congress
    passed some important legislation creating the competitive
    market that we know today, there were 16 million subscribers in
    the U.S. Ten years later, there are 168 million subscribers in
    the United States. In 1993, we had 13,000 cell towers in this
    country, today we have 163,000 cell towers providing better
    quality of service than ever before. Since the advent of the
    industry, this industry has invested $148 billion in creating
    the infrastructure that we know today, $20 billion in 2003
    alone. Eight hundred and thirty billion minutes of use in air
    time over the wireless framework just last year, 830 billion
    minutes of use, and at the same time, as Senator Allen
    correctly said, from 1993 to 2003, better quality of service,
    more minutes of use, more services offered, the cost of
    wireless service has declined from $60 per month to under $50
    per month in 2003. Why? Because of the competition. Competition
    was vibrant and robust. Eighty-seven percent of all Americans
    have a least five, sometimes more, providers to choose from
    when they choose their wireless service provider. Ninety-seven
    percent of all Americans have at least three choices when it
    comes to their wireless carrier. Competition continues to
    produce new, and better, and more innovative services. Text
    messaging, photo and video messaging, broadband Internet
    access, consumer short codes, free long distance, and now, 411
    service, a new service that we are trying to provide to
    customers that we know desire it. Now, 168 million customers in
    the United States do not want to have their number listed, we
    know that. We think, we estimate the number to be more around
    5-8 percent, but still, that represents over 10 million people
    in this country that would actually like to have their number
    listed, and we're responding to our customers because we are
    very customer-sensitive, and customer-centric. It is a very
    highly competitive industry. I'd like to make four really
    important points. CTIA has been tasked by six of the seven
    largest carriers in the country to act as a coordinator in the
    development of the 411 service, and I'd like to make these very
    briefly, these four points.
        First of all, the 411 service would be a totally opt-in
    service. It goes beyond the legislation that's being
    considered.
        Second, you won't be charged to opt-in and you won't be
    charged to opt-out.
        Third, the data that would be held would be held by a
    secure third party in the form of Qsent and Pat Cox to my
    right, but it cannot be sold and it cannot be accessed by any
    other entity, for any other purpose. Finally, this is a service
    that has not even been introduced. There has been no harm, and
    no foul, and it was in my opinion wholly premature and very
    proscriptive for Congress to even be considering this
    legislation.
        In closing, there are, however, matters that Congress
    should be thinking about before the session comes to a close
    that would greatly benefit wireless customers.
        Number one, send the Internet tax moratorium bill to the
    President for his signature, ASAP. Very important, as we
    consider the third generation broadband access over wireless
    devices. And second, the bill to provide needed spectrum for 3G
    advanced wireless services. These are things that are very
    important, and should be high on the priority list of this
    Congress before they leave for this election year. At this
    point, Mr. Chairman, I would conclude my remarks, thank you for
    the opportunity to testify, and I look forward to your
    questions.
        [The prepared statement of Mr. Largent follows:]

         Prepared Statement of Hon. Steve Largent, President and CEO,
              Cellular Telecommunications and Internet Association
        Chairman McCain, Ranking Member Hollings and members of the
    Committee, thank you for your invitation to testify this afternoon on
    S. 1963, the ``Wireless 411 Privacy Act'' introduced by Senators
    Specter and Boxer. This is my first opportunity to represent the
    wireless industry before a congressional committee since becoming
    CTIA's President and CEO last November, and I must admit the view is a
    little different on this side of the dais, but I do welcome the chance
    to provide CTIA's views on this legislation and the issue of the
    development of a wireless 411 service.
        Let me preface my remarks by acknowledging that I have little doubt
    that the authors of S.1963 are well intentioned in their efforts with
    this piece of legislation; however, I sincerely believe that this bill
    is a solution in search of a problem and that S. 1963 is unnecessary.
    The wireless industry has a proven track record of protecting our
    customers' privacy, and we have made a concerted effort while
    developing this directory assistance service to safeguard our
    subscribers' personal information. Moreover, the service is still in
    the planning stages. It is extremely premature for Congress to issue a
    government mandate on a service that has yet to be made available to
    our customers. If there are wireless customers who have serious
    reservations about this service or who just do not want to be bothered
    with the choice of opting-in, they have the option to switch to a
    carrier that is not participating in the wireless 411 service.
        The wireless industry has a great story to tell and I feel
    fortunate to be here today to tell it. Currently, there are more than
    168 million wireless customers in this country as compared to roughly
    38 million when the 1996 Telecommunications Act was signed. This
    represents a phenomenal growth rate of 425 percent. And why has our
    industry enjoyed such a dramatic growth rate? Because of intense
    competition among service providers, a growing number of service
    options, technological advancements, and prudent, forward-looking
    government policies that allowed the market to determine the fate of
    the industry rather than government mandates.
        However, with success, be it athletic, political, or business,
    comes greater scrutiny. It has become apparent to me over the past 11
    months that the wireless industry is becoming viewed more as some sort
    of monopoly utility rather than the hyper-competitive industry that we
    are. To set the record straight there are currently more than 180
    wireless service providers who compete in the U.S. An impressive 93
    percent of Americans live in markets served by four or more operators,
    and a nearly ubiquitous 98 percent of Americans live in a market served
    by three or more operators. Whether urban or rural, American wireless
    consumers have choice and the power to exercise it. Clearly, wireless
    customers have a multitude of service providers to choose from in the
    wireless market, and as a result, receive more value for their wireless
    dollars. Last year, consumers increased their individual usage of voice
    minutes by 22 percent while paying 13 percent less per minute according
    to data released last week by the FCC.
        Customers not only have carrier choice, but also choice among
    service features. Accordingly, another potential choice we want to
    offer our customers is a wireless 411 service, but only for those
    customers who want their number listed. Many wireless customers,
    particularly those in small businesses who spend most of their workday
    away from an office and a landline phone, rely upon their wireless
    phone as their primary business line. We believe these customers would
    welcome the option of having their wireless numbers be made available
    in a 411 service. A survey conducted by the Small Business
    Administration in March of this year entitled ``A Survey of Small
    Businesses' Telecommunications Use and Spending'' confirms that
    wireless services are now used by 73 percent of small businesses, and
    25 percent of all small businesses spend more for wireless services
    than they do for local and long distance telephone services combined.
    Unfortunately, those small businessmen and women who use their wireless
    phones as their primary business line currently have no other choice
    but to pay to have their number listed if they have that option at all,
    which many do not.
        Seeing this void in the marketplace, in February 2002, the wireless
    industry first contemplated the concept of providing its customers with
    a wireless directory assistance service. During the past two and a half
    years, CTIA serving in the role of a coordinator and six of the seven
    largest carriers: AT&T Wireless, Cingular, Sprint PCS, Nextel, T-
    Mobile, and Alltel have proceeded with a thoughtful approach to provide
    a service that our customers want and currently cannot receive.
        Over 8 million Americans have ``cut the cord'' and use their
    wireless phone exclusively; many have no way to have their numbers
    listed and those that do must incur a cost. Unlike the traditional
    landline directory, which lists all customers by default, the wireless
    411 service being developed will only include consumers who
    affirmatively choose to participate. Participating wireless carriers
    will ask their customers if they want their number included. If they
    do, these numbers can be added to the existing directory assistance
    database and be made available by the 411 operator to customers who
    specifically ask for it.
        If a customer chooses not to be included, they will not have to do
    anything--the wireless 411 database will only include numbers that
    customers affirmatively add to the list--all other numbers are
    automatically excluded. The only way a number will be listed is if the
    customer specifically asks that it be made available. In addition,
    unlike the current wireline directory system, all of the national
    wireless carriers have indicated they will not charge customers who
    elect to remain unlisted.
        A mutual concern of both the sponsors of S. 1963 and the wireless
    industry is the issue of a published directory. Let me put to rest any
    misperception that there will be a published directory associated with
    this service. Wireless numbers from this database will not be published
    in a directory. Additionally, the aggregated database of wireless
    numbers will not be sold to any third-party, nor will it be available
    anywhere on the Internet.
        The wireless industry has historically advocated for strong privacy
    measures for its customers such as prohibiting the use of automated
    systems to dial wireless phone numbers and encouraging its subscribers
    to register their wireless number on the Federal Trade Commission's
    ``Do Not Call'' list. Likewise, privacy concerns are paramount in this
    initiative. We have attempted to make every assurance that there is no
    invasion to a customer's privacy as a result of their inclusion in this
    database. Moreover, consumers who choose to be listed will have an
    added protection against telemarketers because of the current
    restrictions on the use of automated dialers calling wireless numbers.
        It is envisioned that the wireless 411 system will operate by
    having participating carriers contact their customers and offering them
    the choice of participating in the service. If they choose to opt-in,
    their wireless contact information will be confirmed by the carrier and
    sent to the database aggregator, Qsent, at which point Qsent will
    integrate that information with the opt-in listings provided by
    wireless customers of all of the carriers who support this service. By
    providing a single aggregated database for opted-in wireless listings,
    operators can make a single query to the Qsent database when a customer
    calls 411 (from either a wireline or wireless phone) to request a
    wireless listing.
        While in Congress, I was privileged to serve on the House Energy
    and Commerce Committee and worked on several privacy-related bills
    dealing with spamming, slamming, cramming, Do-Not-Call, and the privacy
    title of the Gramm/Leach/Bliley Act. All of those bills were introduced
    as a result of bad corporate behavior. With the legislation we are
    discussing today, there has been no bad behavior; in fact, the behavior
    so far is to fashion the service in a manner most protective of
    customer privacy. Moreover, as I keep making the point, the wireless
    industry is such a hyper-competitive business that if carriers that
    choose to participate in a wireless 411 system betray the confidence of
    their customers, as sure as I am sitting here, those customers will
    vote with their feet and switch to another service provider.
        We believe the wireless 411 service is yet another example of the
    efforts of wireless companies to provide their customers with choice.
    It will be opt-in only and participating carriers indicate there will
    be no charge for opting out. There will be no published directory, no
    Internet access to the numbers, nor will there be any third-party sale
    of the numbers.
        The multitude of service and feature options and calling plans,
    better service for lower prices, free voice-mail, caller ID, and 3-way
    calling are all competitive responses to satisfy consumer demand.
    Wireless 411 is one more attempt to provide a service to a growing
    number of wireless customers. We know the service may not be for
    everyone, but many have asked for it and we urge you to allow these
    ultra-competitive companies to offer the wireless 411 service as they
    propose. Customers truly are the ultimate regulators in a competitive
    market and they are capable and willing to decide for themselves
    whether a service is viable.
        In closing, as someone who used to sit on the other side of a
    nearby dais, I know the importance that your constituents place on
    protecting their privacy. I also know that the wireless industry has a
    proven track record of supporting legislation to protect its customers'
    privacy. My concern with S. 1963 is that it offers no more privacy
    protection than the wireless industry's own proposed 411 service, but
    if enacted, the legislation may deter future innovation and industry
    initiatives for fear government mandates will step in even before new
    services get off the ground.
        I welcome any questions you may have.

        Senator Allen. Thank you, thank you Mr. Largent, on behalf
    of Senator Wyden and myself, and Senator Ensign and all of the
    Senators here, we agree with you clearly on the Internet tax
    moratorium measure, thanks for that nice little plug, to try to
    get the House to pass that. Now, we'd like to hear from you Mr.
    Rotenberg.

      STATEMENT OF MARC ROTENBERG, EXECUTIVE DIRECTOR, ELECTRONIC
       PRIVACY INFORMATION CENTER; ADJUNCT PROFESSOR, GEORGETOWN
                         UNIVERSITY LAW CENTER

        Mr. Rotenberg. Thank you very much, Mr. Chairman and
    Members of the Committee, it's a real honor to be back before
    you today to talk about wireless privacy and the interests of
    consumers.
        My statement is very similar to the views that were
    expressed by Consumer's Union and the AARP, and the Privacy
    Rights Clearinghouse. You have heard on this panel, I think,
    what is a commonly shared view, that privacy protection will be
    absolutely critical for consumer acceptance of the wireless
    directory, all we're really debating is how best to achieve
    that.
        Also, I listened to the comments of Mr. Strigl from Verizon
    and I thought his position was admirable, not wanting to go
    forward if he thought there would be a privacy risk for his
    customers, I've looked at the principles proposed by CTIA and
    Qsent, and I think they're reasonable privacy principles that
    would certainly provide some protection for customers.
        But in answer to your question, Mr. Chairman, why this is
    not sufficient, and why legislation is important, and why I
    hope you will move quickly on S. 1963, I'd like to remind you
    of a hearing that took place in this committee room 5 years ago
    about Internet advertising. And at that time, we were talking
    about a company called ``Doubleclick.'' And the Doubleclick
    company proposed an Internet-based advertising model that
    answered all of the privacy concerns that the public had
    raised. They said, ``We have a wonderful, fast-moving,
    competitive industry,' they said that privacy protection was
    important, they said it was too soon for Congress to act, and
    they said they would do Internet-based advertising that did not
    require the correction of personal identifiable information.
    And the privacy groups, and the consumer groups and everybody
    else said, ``This sounds great. We support you, we think it's
    innovative, we think it respects privacy, we think it
    demonstrates in some areas, and in fact, Mr. Chairman, it's not
    necessary for Congress to regulate.'' And what happened? A few
    months later, the Doublclick company learned about a database
    room called Claritas, the largest catalog marketer in the
    United States and said, ``Well, we had the old business model
    that didn't require the correction of personal identifiable
    information, but you know, if we incorporate that data with
    Claritas, they make available to us, if we require it, we'll
    have a better, more efficient, more profitable business
    model,'' and they quietly began to revise their privacy
    policies.
        And it became apparent over time, Mr. Chairman, that
    Doubleclick was not able to maintain their commitment to their
    high privacy ground, but in fact they were going to collect
    customer information and that was the point when the public
    objected, when this Committee held hearings, and when the FTC
    began to look more closely at the question of what is required
    to protect consumer privacy in these emerging services.
        Now, we have had similar experiences, with many other
    companies, Amazon, Yahoo and others, that come forward with
    very strong privacy representations. And then, over time,
    business models change, and the privacy bar drops down. The one
    thing that does not change is that those consumers who provided
    their personal information in the first instance, under the
    representation that their personal data would be protected,
    that it would not be disclosed to others, now find themselves
    having to deal with telemarketers, spam, sale to data brokers,
    and worse.
        The reason, Mr. Chairman, I think we need this legislation
    is to establish the baseline. Establish the floor. There is
    nothing, nothing that will prevent Verizon or CTIA from
    developing stronger safeguards, from using the free market, and
    advertising and outreach to say, ``We will do a better job
    protecting privacy than our competitors,'' we welcome that, and
    we encourage that. But to propose that we go forward with the
    service that effectively flips the switch on privacy protection
    for mobile customers, that means that information that we used
    to assume was private, can now lead to us receiving calls from
    people who we don't know, who we didn't give our numbers to,
    and will, on top of it, we will have to pay the cost for those
    calls, I think will create the type of chaos, exactly what
    Senator Boxer mentioned at the opening.
        And, Mr. Chairman, I've had one other experience with
    telecommunications privacy, relevant to this discussion, and
    that's with Telecom Consumer Protection Act. It was done in
    1991, it was an excellent law, but the one piece that was not
    done when that law passed was the ``do not call'' list. It took
    twelve years to get that done. By the time it happened, sixty
    million Americans said, ``Enough is enough.''
        I urge you not to wait on this legislation. You do not want
    to happen with the privacy of cell phone numbers what happened
    with telemarketing in this country. Thank you.
        [The prepared statement of Mr. Rotenberg follows:]

     Prepared Statement of Marc Rotenberg, Executive Director, Electronic
     Privacy Information Center; Adjunct Professor, Georgetown University
                                   Law Center
        I appreciate the opportunity to appear before the Committee today
    to discuss privacy issues raised by a proposed wireless directory for
    customers of wireless of telephone services. My name is Marc Rotenberg.
    I am the Executive Director of the Electronic Privacy Information
    Center in Washington, and I have taught the Law of Information Privacy
    at Georgetown since 1990. As both an advocate and academic, I have
    participated in many of the leading privacy debates in this country.
    With me this morning is Chris Jay Hoofnagle, Associate Director of
    EPIC.
    Summary
        As the wireless industry develops a directory of numbers for
    wireless devices, Congress should act to safeguard privacy and to
    create legally enforceable rights with respect to data in the wireless
    directory. We believe the industry shares our concerns that privacy
    protection will be important for this information, and also recognizes
    that many other new wireless services could be jeopardized if strong
    privacy standards are not established. However, we are not persuaded
    that wireless directories can be administered fairly without legal
    rights for the millions of individuals who will be enrolled in the
    system. These new directories raise the privacy risks of unwanted
    telemarketing, SMS spam, junk faxes, and contacts from undesirable
    callers, including stalkers.
        It is clear that there are very high levels of public support for
    strong privacy safeguards for telephone services. More than 60 million
    American households signed up for the Do Not Call service so that they
    would not receive telemarketing calls at dinnertime. Millions of
    American household have unlisted and/or unpublished telephone numbers.
    According to one survey, 35 percent of households nationwide do list or
    publish telephone numbers. In\1\ major metropolitan areas in
    California, nearly 70 percent of telephone numbers are unlisted.
    ---------------------------------------------------------------------------
        \1\ Testimony of Beth Givens, UCAN, before the California Public
    Utilities Commission, November 25, 1998, available at http://
    www.ucan.org/law_policy/teledoces/bgpacbell.html/.
    ---------------------------------------------------------------------------
        The modern history of privacy protection is one where Congress acts
    in advance to safeguard privacy while allowing emerging technologies to
    develop. Enacting privacy protections for the wireless directories is
    both consistent with Congress' prior actions on privacy issues, and
    necessary in this case to ensure that consumers have substantive rights
    in their personal information. The ``Wireless 411 Privacy Act,'' S.
    1963, is a first step toward addressing privacy issues presented by
    wireless directories. However, we believe this Committee should
    strengthen the Wireless Privacy Act in several aspects before it is
    presented to the full Senate. In particular, we believe that the
    standard for enrollment should be a consumer friendly, opt-in system
    that ensures adequate notice and requires affirmative consent. In the
    third part of our testimony, we raise objections to a related
    telecommunications privacy issue, Junk Faxes. This Committee recently
    reported out the Junk Fax Prevention Act of 2004, S. 2603, without a
    hearing. We urge the members to take a closer look at this proposal.
    The Senate should not enact that bill, as currently drafted, as it will
    likely exacerbate the junk fax problem.
    I. Congress Has Safeguarded Privacy as New Telecommunications
            Technologies Emerge
        The recent history of privacy law in the United States is largely a
    story of efforts by Congress to pass laws to safeguard privacy as new
    technologies emerge. There are, for example, the privacy subscriber
    provisions of the Cable Act of 1984 (cable television), the Video
    Privacy Protection Act (video rental records), the Electronic
    Communications Privacy Act of 1998 (electronic mail), the Polygraph
    Protection Act of 1988 (lie detectors), and the Children's Online
    Privacy Protection of 1999 (Children's data obtained by companies
    operating on the Internet).
        The Telephone Consumer Protection Act of 1991 is especially
    relevant to this debate, as that law shielded individuals from auto
    dialers, junk faxes, and telemarketing to wireless phones long before
    the devices were adopted on a widespread level. It is because of that
    1991 law that individuals have a sanctuary from commercial interruption
    when it comes to their wireless phones. Because Congress acted early to
    shield wireless devices, they continue to be adopted by millions of
    Americans. If Congress had not acted to protect privacy, wireless
    services probably would not be as successful as they are.
        These privacy laws have come about in response to challenges posed
    by new technologies. However, the aim is rarely to limit the technology
    or to stifle a new business; it is instead to ensure that the data
    collection is fair, transparent, and subject to law. This approach
    builds consumer confidence, establishes a stable business environment,
    and allows for the benefits of new technology while safeguarding key
    interests.
        It has been our experience that in a self-regulatory environment,
    even reputable companies are swayed by forces that result in watering
    down privacy protections. Without legal protections, privacy provisions
    in the wireless directory may be changed at will by the wireless
    industry.
        In other contexts where businesses operate in a self-regulatory
    privacy atmosphere, there has been a race to the bottom, even among
    profitable companies. For instance, eBay changed users' preferences on
    receiving marketing and watered-down their privacy policy in 2001. The
    company changed the privacy choices of six million registered eBay
    members who had expressed that they did not want to receive spam or
    telemarketing. Amazon.com, a popular online bookseller, changed its
    privacy policy in December 2000. Amazon reneged on its promise to never
    reveal customers' transactional information. Yahoo, a popular Internet
    portal and free e-mail service, changed its policies so that the
    company could send more spam to customers. The change required Yahoo
    users to re-opt-out in order to avoid the new marketing messages.
    Drkoop.com, a popular medical website founded by former Surgeon General
    C. Everett Koop, sold its e-mail list as a bankruptcy asset to
    vitacost.com in July 2002. Drkoop.com gave individuals one week to opt-
    out of the sale, despite making guarantees of opt-in protections for
    transfer of personal data.
        Congressional action is warranted here because privacy is more
    likely to be invaded when creating a wireless directory than a wireline
    one. Consumers tend to treat their wireless phones as personal devices.
    Often, consumers take their wireless phones everywhere they go, making
    the devices an avenue for disruption in contexts where wireline phones
    cannot reach. Consumers are also charged for the calls and SMS messages
    received on their phones. An improperly implemented wireless directory
    could result in both more personal, but also more costly, disruption to
    consumers.
        In the past, unfortunately, phone companies have sided against
    privacy and consumers when implementing protections for CPNI, Customer
    Proprietary Network Information. CPNI is the data collected by
    telecommunications corporations about a consumer's telephone calls. It
    includes the time, date, duration, and destination number of each call,
    the type of network a consumer subscribes to, and any other information
    that appears on the consumer's telephone bill. Although Congress in
    passing 47 U.S.C. Sec. 222(c)(1) specified that phone companies should
    obtain the ``approval of the customer'' before using CPNI, the
    companies interpreted ``approval'' to mean opt-out, and used the data
    unless a consumer specifically objected.
        Finally, establishing a right of privacy in law does not require
    extensive regulation. There are many privacy laws of only a few pages
    that are extraordinarily effective. The subscriber privacy provision in
    the Cable Act of 1984, for example, is one of the most effective
    privacy laws in the U.S. It provides a very good model for emerging
    privacy issues in the commercial world.
    II. The Wireless 411 Privacy Act, S. 1963, Is a Good Start But Could Be

            Improved
        We applaud the Members for introducing the Wireless 411 Privacy
    Act, S. 1963, and the Chairman and Ranking Member for holding a hearing
    on this important issue. The Wireless Privacy Act is a good starting
    point for addressing the privacy issues implicated by wireless
    directories. We have detailed the major provisions of the bill below
    while suggesting critical improvements.
        Section 3 of S. 1963 amends the Communications Act of 1934, 47
    U.S.C. Sec. 332(c), to create an ``express prior authorization''
    standard for enrollment in the wireless directory for current wireless
    subscribers. We strongly support this opt-in standard for enrollment in
    the wireless directory.
    The Standard Should Be Opt-In for New Subscribers
        Under Section 3 in a provision creating 47 U.S.C.
    Sec. 332(c)(9)(B), new wireless subscribers would automatically be
    enrolled, but could opt-out through ``convenient mechanisms'' at the
    beginning of the wireless contract, in the billing of the service, and
    when receiving any connecting call from a wireless directory assistance
    service. Here, we believe that the Committee should eliminate this
    provision and require opt-in before enrollment for both new and current
    wireless subscribers.
        An opt-in framework would better protect individuals' rights, and
    is consistent with most United States privacy laws. For instance, the
    Family Educational Rights and Privacy Act, Cable Communications Policy
    Act, Electronic Communications Privacy Act, Video Privacy Protection
    Act, Driver's Privacy Protection Act, and Children's Online Privacy
    Protection Act all empower the individual by specifying that
    affirmative consent is needed before information is employed for
    secondary purposes.
        Further, public opinion clearly supports an opt-in system for
    information collection and sharing. A study conducted by the American
    Society of Newspaper Editors (ASNE) and the First Amendment Center
    (FAC) in April 2001 illustrated strong support for privacy and
    specifically for opt-in systems. An August 2000 Pew Internet & American
    Life Project Poll showed that 86 percent of respondents supported opt-
    in privacy policies. Historically, polls show similar support for the
    right to affirmative opt-in consent. For instance, a 1991 Time-CNN Poll
    indicated that 93 percent of respondents believed that companies should
    gain permission from the individual before selling personal
    information.
        Opt-in is more effective and more efficient than opt-out because it
    encourages companies to explain the benefits of information sharing.
    This allows consumers to exercise meaningful control over personal
    information. Experience with opt-out has shown that companies routinely
    make it difficult for consumers to safeguard personal information.
        In other settings, phone companies have thwarted opt-out processes
    by demanding excessive authentication for opting out. For instance, the
    opt-out process for Customer Proprietary Network Information (CPNI)
    data sharing established by one major phone company is very confusing,
    and places the burden on individuals to navigate a five-step process in
    order to opt-out.
        If an opt-out standard is maintained, the procedures should be
    clearer. New subscribers should have the opportunity to opt out when
    entering the contract, by calling customer service at any time, or by
    checking a box on the monthly payment coupon that is mailed back to the
    wireless company.
    The Bill May Preempt State Law
        Although S. 1963 is silent on preemption, its placement at 47
    U.S.C. Sec. 332 may express a Congressional intent to supercede
    stronger state laws. Consumer protection is historically state-based
    responsibility. Federal laws in this area should establish a floor of
    protection rather than as a ceiling.
        There are important reasons in our form of government to continue
    to allow the states to operate as ``laboratories of democracy.''
    Congress may fail to act or may act in such a way that reduces or
    limits the protections that a state might otherwise choose to provide
    for its citizens. States may also innovate and explore different
    approaches to common problems.
        The California Legislature, for example, has passed legislation to
    protect wireless directory privacy. The California wireless privacy
    bill, AB 1733, received strong bipartisan majorities in the State's
    Senate and Assembly, and awaits signature by Governor Schwarzenegger.
        The California bill requires carriers to obtain affirmative consent
    before selling lists of phone numbers or including them in wireless
    directories. The bill allows individuals to revoke consent at any time.
    Carriers must comply with the unlisting within 60 days. The bill also
    prohibits carriers from charging for enrollment/refusal to enroll.
        There is also a right of recourse against violators of the law.
    Individuals can bring a civil suit against ``deliberate violations.''
    Congress should adopt provisions at least as strong as the California
    law, especially if Congress acts in such a way as to preempt further
    state legislation.
    Greater Technical Safeguards Could Be Encouraged
        Under Section 3 in a provision creating 47 U.S.C.
    Sec. 332(c)(9)(C), the bill regulates calls forwarded through wireless
    directory assistance by requiring ``cloaking.'' Calls could only be
    forwarded to those in the wireless directory. Before forwarding a call,
    a carrier would have to disclose the caller's identity to the
    recipient, the recipient must be able to decline the call, and the
    carrier could not disclose the recipient's number to the caller. This
    cloaking of the recipient's phone number would be an excellent service
    for callers and recipients, but it is unclear whether it is necessary
    for Congress to mandate this specific business model. For instance,
    individuals who decide not to enroll in wireless directory may choose
    instead to sign up for this forwarding service with cloaking. But the
    bill would prohibit carriers from offering that option.
        Carriers may develop other pro-privacy technical protections to
    encourage greater participation in wireless directories. For instance,
    under an ``announce'' system, the recipient would hear the name of the
    caller before accepting the call, much like collect calling works
    today. Again, individuals may wish to stay out of the wireless
    directory, but accept calls through an announce system. Congress should
    not prohibit carriers from creating and offering these options. We
    believe that Congress should instead encourage the FCC to develop
    privacy-protective technical options with the carriers. Accordingly, we
    recommend that this provision be stricken from the bill, and replaced
    with language that directs the FCC to develop options with carriers
    that respect individuals' privacy.
    The Publication Prohibition Should Be Strengthened
        Under Section 3 in a provision creating 47 U.S.C.
    Sec. 332(c)(9)(C), the bill prohibits publication of the wireless
    directory in print or electronic form. We think that this is a well-
    intentioned provision, but that it falls short of ensuring protection
    for the wireless directory. While formal publication of the wireless
    directory would be privacy invasive, there is a strong risk of privacy
    invasion caused by the sale of the wireless directory to commercial
    data brokers or to others who traffic in personal information. The
    legislation should prohibit publication, but also bulk disclosure of
    the numbers to telemarketers, data brokers, or to other unaccountable
    sellers of personal information. We note that California AB 1733 would
    prohibit the sale of databases of phone numbers.
    The Definition of ``Wireless Telephone Number Information'' Should Be
            Narrowed
        Under Section 3 in a provision creating 47 U.S.C.
    Sec. 332(c)(9)(F), S. 1963 has a broad definition of the information
    that can be stored in the wireless directory and disclosed to callers.
    ``Wireless telephone number information'' includes the telephone
    number, electronic address (e-mail address or new form of identifier,
    such as Electronic Numbering, or ``ENUM''), physical address, and any
    other identifying information by which a calling party may reach a
    subscriber. We think that this definition should be narrowed to include
    only the name and wireless telephone number. Consumers should have the
    option, but should not be required, to include other information.
    A Right of Recourse is Needed
        S. 1963 does not specify a clear remedy for individuals who are
    wrongfully included in the wireless directory. The bill should be
    amended to create clear avenues for recourse against carriers that
    wrongfully list or otherwise fail to comply with Congress' direction.
    Individuals Should Not Be Charged
        Under Section 3 in a provision creating 47 U.S.C.
    Sec. 332(c)(9)(E), the bill prohibits charging for enrollment or
    refusal to enroll. We believe that this is an appropriate protection
    for individuals, and that it should be extended to the wireline
    context.
        Currently, wireline carriers charge individuals who wish to protect
    their privacy. Here in Washington, DC, Verizon charges residential
    consumers $5.16 a year for an unlisted number and $9.72 for an
    unpublished number. This bad wireline precedent should not be continued
    into the wireless realm.
    III. The Junk Fax Prevention Act Will Promote Junk Faxes
        We wish to comment here on a related telecommunications privacy
    issue, the problem of junk faxes, unsolicited commercial facsimile
    messages. S. 2603, the Junk Fax Prevention Act of 2004, a bill that was
    reported out of this Committee favorably without amendment, will
    exacerbate the junk fax problem. Section 2 of S. 2603 would amend one
    of the strongest consumer privacy laws, the Telephone Consumer
    Protection Act (TCPA), to create an ``established business
    relationship'' exemption for senders of junk faxes. The same section
    would also effectively eliminate recently created Federal
    Communications Commissions rules that require the written consent of
    the recipient before junk faxes are sent.
        We recognize that obtaining written consent and managing time
    periods of established business relationships can create paperwork
    burdens on businesses. However, junk faxing is a serious consumer
    protection problem, and it places a greater paperwork burden on
    recipients of unwanted messages. We note that last year, the primary
    sender of junk faxes was fined more than $5 million for violations of
    the TCPA. Many consumers with fax machines unplug the devices in order
    to avoid junk fax broadcasting. Others have lost sales because of fax
    machines clogged with junk fax transmissions while customers attempt to
    send orders. In Washington States, a hospital was deluged with junk
    faxes, putting patients at risk. In a lawsuit filed by law firm
    Covington & Burling, it was alleged that a single junk faxer sent 1,634
    unsolicited advertisements in a single week. Small businesses too are
    caused significant costs of ink and paper as a result of junk faxes. S.
    1603 will intensify these problems by creating an additional legal
    defense and justification for transmitting these unwanted messages. On
    the whole, the cost of this bill on the efficient operation of business
    and government offices is far greater than the alleged benefits touted
    by proponents of S. 2603.
        We strongly urge Members of the Committee to withdraw their support
    for S. 2603. The established business relationship exemption will open
    individuals to hundreds or even thousands of unwanted commercial fax
    solicitations. Technically, every time a consumer makes a purchase or
    even an inquiry about products or services, they create an existing
    business relationship with a company. Accordingly, the average consumer
    under S. 2603 will create the possibility of numerous junk faxes in
    their daily activities. Merely getting an estimate from a plumber, even
    where the consumer declines to employ the plumber's services, would
    establish an open-ended business relationship that enables the sending
    of junk faxes.
        We also believe that the Federal Communications Commission's
    requirement for written consent from recipients is reasonable in
    certain circumstances. It has been our experience that junk faxers will
    claim that they have obtained the consent of the recipient. Without a
    writing, it is difficult for consumers to argue to a court that they,
    someone in their household, or even the previous owner of the phone
    number, did not consent to receiving junk faxes.
        If the Committee does maintain support of S. 2603, we think the
    bill should be amended to allow the Federal Communications Commission
    to reinstate the written opt-in requirement and revoke the established
    business relationship exemption with respect to the most prolific junk
    faxers. That is, when the Federal Communications Commission determines
    that any sender routinely violates the TCPA, the agency should be able
    on a case by case basis to impose a written consent requirement and
    revoke the established business relationship defense. Furthermore, we
    support allowing the Federal Communications Commission to define the
    length of an established business relationship. The standard that could
    be created in S. 2603 of five to seven years, is entirely too long.
    Conclusion
        Privacy protection remains critical for consumer acceptance of new
    telecommunications services. The development of wireless directors
    poses special risks to privacy as it will impact many new services. For
    this reason, we believe it is particularly important to establish
    guidelines that are both sensible and effective. We appreciate the work
    of this Committee and the sponsors of S. 1963 for their leadership in
    ensuring that the wireless directory is implemented fairly and respects
    consumer privacy. Privacy protection is critical to the adoption of the
    wireless directory, and to respecting the wishes of those who do not
    wish to be listed.

        Senator Allen. Thank you. I want to thank all our witnesses
    for your testimony, now we'll be posing some questions and have
    a discussion with you so we can best understand it from the
    varied perspectives we've heard here, and this is a very good
    and balanced, diverse panel.
        Mr. Strigl, you've said as insofar as Verizon's concerned,
    you think a directory is a terrible idea, you won't have
    nothing to do with it, for a variety of reasons. But would you
    then support Congress passing a law prohibiting a directory
    from even being put into place?
        Mr. Strigl. Mr. Chairman, I don't think a law is required.
        Senator Allen. Do you, then, not support this measure,
    which doesn't ban a directory, as such.
        Mr. Strigl. If this is what Congress would like to do, I
    would say those who support the directory in our industry have
    it coming to them. I want to be very clear, this is not a
    project that we should move ahead with as an industry. There
    are other ways of doing this.
        Senator Allen. But, do you think the government ought to
    stop?
        Mr. Strigl. I am not for more regulation, never have been.
    This is an extremely competitive business, but I do think that
    this is a project that shouldn't proceed, I think that privacy
    is extremely important, it's a matter of principle with us.
        Senator Allen. Let me say this, personally, I agree in the
    significant aspect of this compared to all the aggravations we
    get, the pop-ups and all the rest on the Internet. The thing on
    cell phones is if you get a call, an unwanted call, and you get
    plenty of unwanted calls, but I'm talking about a true
    pestering calls, you are having to pay for it. Unlike a land
    line or the Internet, which is a waste of time and effort, but
    it doesn't, you're not getting billed for it, as such.
        Now, Mr. Largent stated in his testimony, the policy of
    those in the wireless industry, and not all want to do it, it
    may be good marketing for Verizon, but he stated, ``It will be
    opt-in only, and participating carriers, indicate those
    participating, that there'll be no charge for opting out. There
    will be no published directory, no Internet access to the
    numbers, nor will there be any third party sale of numbers.''
    Now, suppose the panelists, does anybody disagree with that
    policy? I understand, Mr. Strigl, you think it's a terrible
    idea, but do any of you all, in the event there's a directory,
    disagree with those principles?
        Mr. Rotenberg. I think the key question, Mr. Chairman, I
    think is, what would be the consequence if those principles are
    violated? I mean, as I said in my statement, I think it's a
    good set of principles, but if in fact one of the participants
    decides, and perhaps had a good business reason for doing so,
    to change, what would the consequence be?
        Ms. Pierz. Mr. Chairman, I'd like to provide a comment
    also. I do like the principles that have been put into place as
    the CTIA plans, but I do think we can do a little bit better,
    and specifically when we looked at the idea of knowing who's
    calling you, because consumers said they were worried about
    getting calls from people they didn't want to talk to. And not
    having the number divulged, so that there's actually a
    gatekeeper in place, if I call directory assistance the first
    time and get your cell phone number I've always got it, and
    it's very easy for me to, as you said, pester you with calls.
    But if each time you're calling directory assistance, it's
    forwarded and the person knows who's calling and can accept the
    call or not, you actually create a much more valuable service
    for consumers, but that's a very hard thing, no one carrier can
    put that in place without some sort of a baseline that asks
    everyone in the industry to meet that standard. And then,
    companies can build more advanced and protective services on
    top of that base, but it provides a common base across all
    fixed line and wireless carriers to protect consumers' actual
    phone numbers so it's not divulged, and to let them know who's
    calling.
        Senator Allen. When you have a situation where, and no one
    disagrees with this, that 93 percent of all Americans live in
    markets provided with at least four choices, if not more, 93
    percent. We don't have that in other industries. Obviously you
    can get cable or satellite, but there's not two cable, even for
    broadband, at this point. You're able to get a cable modem,
    those of us would like to see DSL available more, maybe
    broadband over power lines, satellites all the rest, wi-fi, and
    so forth. But the point is that watching the cell phone
    business with so many different companies offering, people are
    going to switch, you're going to lose market share, you've
    gotta keep those customers for over a year, maybe even more to
    get them as a customer.
        Mr. Largent, let me finish with you, then. What are the
    industry's incentives to protect the privacy that is aligned
    with the interests of a particular consumer or customer, is it,
    how does that affect their own economic interest, from your
    perspective, of those who want to get involved in this, or may
    want to have their number listed in the directory?
        Mr. Largent. Let me share, and I'm glad you asked that
    question because it's exactly what I wanted to talk about, and
    that is that the wireless carriers, my friend on my left over
    here, talked about what happens if they go a different
    direction after they've said they're not going to list your
    number, or whatever. The fact is that the boilerplate contracts
    that have, that we've all signed when we signed up for cellular
    service, including that language that says, in signing, in
    giving us your consent to sign this contract, we can put your
    name in a directory assistance. And they signed the contract.
    That's kind of been the boilerplate-type language that's been
    in their contracts for a long time, language which, by the way,
    all the carriers have said they're going back to their current
    customers and asking them, ``Do you want your number listed?''
    so they can either opt-in or opt-out, and by the way, there's
    no charge to opt-in, there's also no charge to opt-out, unlike
    the land line, but my point is that carriers have had
    permission, contractual permission to list numbers for a long
    time, and they've never done it because they have respected our
    customers' privacy right.
        Now, when we want to do it, we're saying we're going to
    develop a 411 service or ask them, ``Do you want to play or
    not?'' and the real key question in this debate, really, is
    about what some people have sort of said offhandedly is, this
    is about privacy. The question that I think the Senate needs to
    ask in considering this legislation is: how is a customer's
    privacy potentially violated here? And I think you brought the
    guy to answer that question, right here on my right, and it's
    Pat Cox, who is the third party who has been chosen to protect
    that data that would be submitted by the participating
    carriers. How is a customer who either opts-in or opts-out, how
    is their privacy, their personal information going to be
    threatened as a result of this 411 service? And the answer that
    we believe we've gotten from Pat Cox and Qsent is, that it's
    not at all. It's not threatened at all. If you opt-in, you're
    saying, ``I want my information published, or available,'' and
    if you opt-out, you're saying, ''You can't contact me,`` and
    that rule will not be breached.
        So, the bottom line, and the answer to your question is
    that it goes to what Senator Boxer said, you know, we know
    business, we know what it's about, it's about the bottom line.
    If carriers start offending customers by violating their
    privacy rights, guess what? They get to vote with their feet,
    and they get to move to a non-participating carrier, and they
    lose market share, and then they start hearing from the
    shareholders, and those people that make those decisions are
    gone, and that's the way the market should work.
        Senator Allen. Thank you, thank you Mr. Largent. Senator
    Boxer?
        Senator Boxer. Mr. Largent, how long have you been in your
    job?
        Mr. Largent. November of 2003.
        Senator Boxer. Well, I think you ought to leave the left/
    right partisanship behind you, because you've got to deal with
    Democrats/Republicans on this Committee, and I think turning to
    someone who represents consumers, and saying ``left'' is
    outrageous. Because we're all consumers. You may have noticed,
    or maybe you didn't, so let me tell you. When we passed the no-
    call directory, it was 95-0, and your friends on the right
    marched right down the middle aisle for consumers. We're people
    from every part of the political spectrum, so let's leave that
    behind, because we do tend to leave that behind in this
    Committee. We reach across to each other, and we tend to work
    together, so that's just . . .
        Senator Allen. I do believe he was talking directionally on
    the panel. Mr. Largent: It was a total tongue-in-cheek comment,
    but I apologize, I didn't mean to offend anybody.
        Senator Boxer. It was more than said directionally. I know
    political talk when I hear it. So, let me go on. I agree with
    you, Mr. Largent, that we need to pass the no Internet
    taxation. But we also have to do more than one thing at a time.
    We've gotta do that, and we've gotta do this. Because people
    are concerned already. They're stuck, some of them, with 2 year
    contracts, so your point about, they can vote with their feet,
    yes, if they pay a hundred and fifty bucks to get out of some
    contract that maybe isn't in their favor. Let me give you an
    example. I ask unanimous consent to place in the record this
    contract, AT&T, which was just changed for the new customers in
    June, I ask unanimous consent to place it in the record.
        Senator Allen. So ordered.
        [The information referred to follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Senator Boxer. Okay, ``You consent to our use and
    disclosure of your name, address and identifier, e.g., mobile
    cell number including area code for any lawful purpose,
    including without limitation, the provision of directory
    assistance, and publication of directories. We may charge a fee
    for inclusion in directory listings or publications, or to be
    unlisted or unpublished.'' Then there's this whole way that you
    could get out of it by going to the end of the contract,
    filling in your identifier of your phone, it makes it very
    tough to get out of this thing. So right now, people stuck with
    this contract have already agreed to this, unless they read the
    very fine print, which I doubt very much.
        So now, after Senator Specter and I introduced the
    legislation, I'm very proud that he's here, because I think
    he'll speak very well on this point. We saw some changes coming
    down.
        Now the new AT&T Wireless says, ``As of June 2004, the
    language of the AT&T Wireless Privacy Policy which is
    referenced in our Service Agreement, reads as follows: AT&T
    Wireless does not currently disclose wireless numbers in
    directory assistance systems or published directories. If we do
    so in the future, you will be able to choose whether your
    number is listed.'' It says nothing about charging people for
    it, you know, and that's why our legislation is so key, so 1
    day, you get this, where your number could be anywhere, then
    after Senator Specter and I introduce our legislation you get
    this, and what I'm saying is why not have a national policy
    that allows for a directory with certain rules attached to it?
    I think it makes great sense. And I want to ask a question to
    Ms., how do I say it?
        Ms. Pierz. Pierz.
        Senator Boxer. First of all, thank you for telling us about
    the poll that you conducted. Because it disproves what was said
    that people really don't care about this, are not worried about
    it. People are worried about this. And thanks to the candor of
    the panel. I have to compliment those who now know there is a
    directory being prepared. I happen to agree with Mr. Strigl. I
    think it's bad business, but hey, you know, it's been a long
    time since I was in the private sector. But, we know, somebody
    could come along from a smaller company and not be able to
    resist selling the list or anything else. Just because it's in
    your guidelines now, doesn't mean it's in your guidelines
    tomorrow, to wit, here's one policy before we introduced the
    legislation, and here's another. And next week there could be
    another, and another.
        So, this is important, and I want to get to the question of
    our children. I know all of us have kids, love kids, are
    grandparents, are aunts and uncles. A teenage girl, and they
    love to get phone calls, I had one, she now takes care of me,
    she's that old now. Having her number listed in this directory?
    Does that concern you, Ms. Pierz, that we'll have some
    youngsters out there, because a lot of us give our kids and
    grandkids cell phones for emergency use that some stalker or
    someone else could come forward--let me tell you why this
    matters to me. I wrote legislation that stopped states from
    giving out home addresses and phone numbers from a drivers'
    license. South Carolina sued, and the Supreme Court upheld it
    unanimously, including this current court. Privacy is an
    American value. I'm concerned about our kids. I don't want to
    wait to have the first father up there saying, ``Some stalker
    got a hold of it. That number. And met my daughter.'' Is this a
    concern that you found out that, that you would share?
        Ms. Pierz. Well, I can speak as the mother of a teenage
    daughter, and no, I would not want her number listed. We didn't
    ask consumers any specific question about children or people
    under 18 in this list. You do have to be over 18 to sign a
    contract, so, a parent's name would appear on the contract,
    rather than the child's number.
        The way that the EU's handled this, is they passed
    legislation that numbers of any kind, and many more children in
    Europe have phones than do here, but numbers of any kind,
    telephone numbers or a home number, that would be a child's
    number cannot be published in any type of directory, anywhere.
    They're always masked or unlisted.
        Senator Boxer. Well, thank you, that's very interesting.
    Well, Mr. Chairman, I want to thank the panel because I think
    they were very straightforward, all of them, with their
    opinions, and that's so helpful to us. You all just spoke right
    from the heart, and I think it really helps us. Again, I'm glad
    to see Senator Specter here.
        Senator Allen. Thank you, Senator Boxer. Senator Specter,
    we went forward with the panel here, and we're in the midst of
    questioning. I would ask for the colleagues who are in line,
    could we hear from Senator Specter? You may get dragged into
    the questioning as well.
        Senator Wyden. I'm next in line, I think, but I'd be happy
    to let Senator Specter go before me.
        Senator Allen. I thank my colleagues who have been here
    through the whole hearing, and Senator Specter, if you'd like
    to testify from that good seat, that's normally my seat on this
    Committee. And so we'll hear from you and then continue with
    the questioning. I thank Senator Smith and Ensign for their
    opening statements.

                   STATEMENT OF HON. ARLEN SPECTER,
                     U.S. SENATOR FROM PENNSYLVANIA

        Senator Specter. Well, thank you very much, Mr. Chairman,
    and thank you, members of this distinguished Committee for
    permitting me to speak at this time. I would have been here at
    2:30, but I had an amendment pending before the Government
    Affairs Committee, we're marking up a 9/11 Commission
    legislation, so this was the soonest I could get here, and I
    feel highly honored to be in Senator Allen's chair.
        I don't know if my appearance is really necessary since my
    co-author, Senator Boxer is here to speak about this issue and
    I will be very brief, I know you have more questions for this
    panel and another panel.
        This Privacy Act, Wireless 411 Privacy Act is really very
    fundamental. It seeks to allow people who have cell phones, 163
    million now, not to have their numbers disclosed unless they
    permit it. And the intrusions on the telephone are; it's hard
    to be home for an evening under other circumstances without
    being interrupted by communications, people calling up for
    commercial purposes, notwithstanding legislation which we've
    passed in the field, and many of us have had our names taken
    off, but it's very hard to have a quiet moment anywhere, under
    any circumstance. And to have somebody publish the cell phone
    numbers is an extraordinary intrusion, for whatever the poll
    was worth, 88 percent of the cell subscribers would not like to
    have their telephone numbers listed. Cell subscribers, under
    many circumstances have to pay for the number of minutes used,
    so they get an interruption, undesirable call, they are not
    only interrupted and bothered, but they have to pay for it as
    well.
        There are plans to proceed with the publication of a White
    Pages sometime in the immediate future, so it's indispensable
    that Congress acts very, very promptly, so I'm delighted to see
    this hearing which is held today.
        There are other provisions of the bill which would permit a
    cell phone owner to know what call was coming in to be able to
    control his own time, her own time, and I think it is just a
    very, very basic privacy matter, an expense matter that if you
    have a cell phone, you shouldn't have to have people know your
    number to bother you, it's just as simple as that.
        I think in the words of Supreme Court Justice Douglas said,
    ``Privacy is the right to be left alone.'' The right to be left
    alone, and that's pretty hard to come by in this day and age,
    you don't have to be a Senator to have that virtually non-
    existent.
        That concludes my testimony, Mr. Chairman.
        Senator Allen. Thank you, Senator Specter. I know you're
    one of the MVPs in the Senate and having to be in different
    places, and we thank you and Senator Boxer certainly carried
    your messages, the testimony, you would have enjoyed listening
    to the testimony here which I think actually addresses many of
    your concerns from even those who are talking about a
    directory, that no one who wishes not to have their number in
    any sort of directory actually, do have the option of doing so,
    then there are others, such as Verizon, who just think the
    whole idea's awful and don't want to have to do it at all.
        At any rate, let us proceed.
        Senator Specter. Mr. Chairman, I'd just like my prepared
    testimony introduced as part of the record.
        [The prepared statement of Senator Specter follows:]

          Prepared Statement of Hon. Arlen Specter, U.S. Senator from
                                  Pennsylvania
        Chairman McCain and distinguished members of the Committee, I
    appreciate the opportunity to testify before the Senate Committee on
    Commerce, Science, and Transportation about the importance of privacy
    protections for wireless telephone numbers. In November 2003, I
    introduced S. 1963, the Wireless 411 Privacy Act, along with Senator
    Boxer.
        As every Senator is aware, consumers today rely on their wireless
    telephones as a vital and important means of communication. Wireless
    telephones enable families to stay connected, permit commerce to be
    conducted anywhere at any time, and provide a vital link in the event
    of an emergency. Some people have even abandoned traditional telephones
    and now use their wireless phones as their primary phone service. In
    fact, the Federal Communications Commission has begun requiring number
    portability for wireless phones so that consumers, if they wish, can
    make their wireless phone their only phone.
        The wireless industry is on the verge of introducing a ``wireless
    white pages'' service, and though this step could have positive
    benefits, it raises concerns about how consumers' expectation of
    privacy will be protected. Consumers are not willing to give up control
    of their cell phone numbers. According to a survey, 88 percent of
    cellular phone users said they would not want their wireless number
    disclosed. The legislation I have introduced, along with Senator Boxer,
    ensures that consumers' expectations will be preserved.
        An important reason that Americans increasingly trust their cell
    phone service is that they have a great deal of privacy in their cell
    phone numbers. For more than 20 years of cellular service, consumers
    have become accustomed to not having their wireless phone numbers
    available to the public. The protection of wireless telephone numbers
    is important. For example, wireless customers are typically charged for
    incoming calls. Without protections for wireless numbers, subscribers
    could incur large bills, or use up their allotted minutes of use,
    simply by receiving calls they do not want--from telemarketers and
    others. Because consumers often take their cell phones with them
    everywhere, repeated unwanted calls are particularly disruptive.
        It may surprise my colleagues that today, no law or regulation
    prohibits a carrier from divulging your wireless telephone number. And
    with the industry poised to introduce wireless directory assistance
    services, it is important for Congress to act now to preserve the
    expectation of privacy that consumers have in their wireless phone
    numbers. Because wireless directory assistance offers great benefits as
    well as posing significant privacy concerns, the legislation I have
    introduced strikes an important balance. S.1963, the Wireless 411
    Privacy Act, enables those consumers who want to be reached to be
    accessible, while providing privacy protections that are important to
    consumers.
        First, this legislation permits the Nation's 163 million wireless
    customers to choose not to be listed in wireless directory assistance
    databases. This feature gives consumers the ability to keep their
    numbers entirely private. Second, for those in the directory assistance
    database, the bill requires wireless providers to use systems that give
    users privacy protections and control over the use of their wireless
    numbers. These services must not divulge a subscriber's wireless number
    (unless the subscriber consents to disclosure), the service must
    provide identifying information to the wireless subscriber so that the
    subscriber knows who is calling through the forwarding service, and the
    service must give a subscriber the option of rejecting or accepting
    each incoming call. Finally, this legislation prohibits wireless
    carriers from charging any special fees to consumers who wish to
    receive the privacy protections provided by the bill. Customers should
    not have to pay extra for the privacy protections that they have come
    to expect. There should be no ``privacy tax'' for consumers to continue
    the privacy protection they have long enjoyed, and this bill ensures
    that will be the case.
        I, once again, urge my colleagues in this Committee to adopt
    legislation that ensures consumers' privacy decisions are respected.
    Thank you.

        Senator Allen. It is so ordered, make sure we get that, and
    I know you, probably, if you want to stay you may, in the event
    that you're being summoned somewhere else.
        Senator Specter. Mr. Chairman, it's not really understood
    widely, how many places we have to be at the same time, and as
    we speak, Appropriations is marking up billions of dollars, and
    I'd like to be able to participate. Thank you.
        Senator Allen. And we all hope you look kindly on us for
    our forbearance as you make those decisions on the
    Appropriations Committee.
        [Laughter.]
        Senator Wyden. Mr. Chairman, I just want to say, that's the
    reason why I wanted the Senator from Pennsylvania to go before
    me and that he is so helpful on so many other things.
        [Laughter.]
        Senator Allen. All right, that's enough, enough. All right,
    the Committee will be back in order, no more of this problem
    before Senator Specter.
        [Laughter.]
        Senator Allen. All right, now, Senator Wyden, any questions
    you have?
        Senator Wyden. Yes, Mr. Cox, what's the potential for
    innovation in this space? You know, my sense, and focus on
    these issues is I think as wireless directory assistance
    evolves over time. We're going to have a chance to ensure that
    this is both more useful and more protective of privacy at the
    same time. Tell me what your sense is on the potential for
    innovation in this space?
        Mr. Cox. Senator Wyden, I've always found you very
    interested and knowledgeable about technology and I wouldn't
    expect a question any different than that from you, thank you
    for asking that.
        For example, some of the points that Kathleen has brought
    up here about consumers wanting to be able to be notified who's
    calling them, I think those are the kinds of services consumers
    do want, and I think some carriers may try to figure out a way
    to offer that, others might not, I think we can see, this is a
    highly competitive industry, and I think there are companies
    looking to differentiate their service offerings.
        Specifically, on that issue it's very, very hard, if not
    impossible, to do an information based authentication, I think
    we can all recall, we're of the age that we used to use the
    wire-line network, specifically collect calls as a way of
    notifying home, I would call home as Bob Smith, and my parents
    would know what I was doing that day, they wouldn't accept the
    charges, because phone network costs were so great.
        The system can be gamed, there's not really any way of
    knowing who's calling today, but as technology advances and
    information based solutions advance, I think that would be a
    great service offering. There's probably fifteen or twenty
    different kinds of offerings, in talking with Senator Boxer's
    office, learned of her interest and how she'd like to be
    involved in the directory, or not, I think there are going to
    be a lot of offerings around emergency notifications, ways for
    operators to maybe connect calls staying on the line. There are
    state and Federal laws requiring that if a phone call occurs, a
    bill has to be generated that shows numbers that were called
    and who called you if you pay the fee, so it would be hard
    today to protect that privacy with current Federal and state
    regulation, but I think there will be solutions around that,
    for example, not completing the call, and so on, actually
    having an operator intermediate the conversation, and I think
    you'll find a lot of these offerings, maybe the fifteen or
    twenty different ways we can dream up today being delivered.
        My main concern is a lot of legislation today kills that
    initiative, it kills the investment from the venture community,
    it kills the investment from businesses, to find new,
    interesting, valuable services who solve problems for people.
        Senator Wyden. Well, I share your view that it's very
    important that we seize innovation in this area. I know Senator
    Boxer has been working very closely with Senator Smith and I,
    and others to make sure we do this managers' amendment and that
    we get it right. We'll just continue to consult with all of you
    and proceed in that kind of fashion.
        Question, Mr. Strigl from Verizon, so I can get a sense of
    a bit of your concern, first on the basic proposition, we've
    worked with you all on a lot of issues. We ought to be treading
    lightly in this area, and I have to go back to the days when I
    had a full head of hair and rugged good looks to kind of look
    at how we tried on the Internet and others to be pretty
    cautious about the whole tax freedom bill and what we've tried
    to work on this area, but Senator Boxer comes now with a piece
    of legislation that essentially says, absolutely nothing can
    happen unless the consumer wants it. Unless the consumer says,
    ``This is my choice. I'm making the judgment, I'm driving the
    vehicle, nothing happens.'' You all feel that this is going to
    be very bad and Western civilization is going to end and the
    like, but tell me a bit more if you would, why it is so
    bothersome if nothing can happen in this area unless the
    consumer makes the judgment that that's how he or she wants it.
        Mr. Stigl. Well, Senator Wyden, thank you very much for
    your question, let me begin by saying, first of all, the last
    thing we need in this industry is more regulation, as
    competitive as we are. With six nationwide competitors and two
    or three competitors in every local market, the last thing we
    need is more regulation, more rules to follow.
        My view on this is simple, that the consumer has the
    choice. The consumer, if they don't want to be listed, can come
    to Verizon Wireless. The consumer, if they don't want to be
    listed, may be able to not opt-in. I think there is plenty of
    consumer choice.
        My issue with this directory is that there are other places
    consumers of wireless services can opt to join. There are Super
    Pages.com, Switchboard.com, Verizon directory listing, but my
    point here is that customers in this industry have plenty of
    choice, more rules is not what we need, nor do we need this
    directory.
        Senator Wyden. I think you heard me cite this question.
    There clearly seems to be some that are still out there that
    take away the consumer's choice right now, Senator Boxer has
    given you examples of one, I assume we'll get that cleaned up
    in a couple of years, but we could always slide back. I will
    tell you, I can understand why you all think that the cell
    phone directory isn't a good idea. I certainly will say I'm
    sympathetic to the proposition of treading lightly here, but
    it's hard to understand why you all care if other carriers make
    a different decision, and why it is such a bad thing to have
    something that, in effect, establishes a proposition that
    nothing can happen in this area unless the consumer wants it.
    We're going to try to fine tune with this managers' amendment,
    and I want you to note that I'm interested in working with you
    all to try to address as many of your concerns as we can, and
    if at the end of the day you all are just opposed to it, so be
    it, but I want us to tread carefully here, and I'm sympathetic
    to that message.
        Thank you, Mr. Chairman.
        Senator Allen. Thank you, Senator Wyden. I'm going to have
    to leave, but I tell you, I want to thank the panelists, the
    Committee will continue, the hearing will continue, I'm going
    to pass the gavel on to Senator Smith, who's next in line
    anyway. Thank you all.
        Senator Smith. Thank you, Mr. Chairman.
        I'm going to ask the panel here to connect some dots for
    me, I think I've heard testimony that people want to be
    included in the directory, I've heard, I think Senator Specter
    just say they don't want to be included in a directory, like 80
    percent, I think 86 percent was his number. What is it, do the
    people want it or not?
        And I think the greater question I have is why isn't it
    offered? Because it's just bad business to offer it, people
    have some sensitivity to their privacy, and don't want another
    part of it invaded?
        Ms. Pierz. If I can offer a comment on that, just based on
    the research numbers that we have, and I don't want to fall
    into a quagmire of citing statistic after statistic, but
    essentially if you offer consumers no privacy protection
    whatsoever, and just say, ``We put your number into a
    directory,'' 89 percent said ``No, not under those
    conditions.'' And that's because people expect that this number
    is more private, as has been commented before.
        But if you can offer people more privacy, they are more
    willing to list. Under the CTIA proposal, you do get over half
    of consumers, including Verizon customers, who are willing to
    list their number.
        Senator Smith. That's a difference in the numbers I've
    heard here, why the disparity?
        Ms. Pierz. Right. And if you include the fact that the
    number is not disclosed, and they can know who's calling, you
    get 54 percent of people to list their mobile number. And
    that's actually a very high number, because if you look at
    residential numbers only, not total listed, but residential, I
    had a hard time getting the numbers, I finally got a few
    regional averages, but about 67 percent of home phone numbers
    are listed today, 80 percent of all numbers, business and
    residential mixed, are listed, but residential numbers, about
    67 percent, and if you can get 63 percent which, without any
    market experience, having never seen it, but just a short
    description, to list, knowing that their number will not be
    given out, and knowing they can have some control over who can
    reach them, that's a really good number.
        Senator Smith. Mr. Strigl, why does Verizon not do it and
    the other carriers want to do it?
        Mr. Strigl. We believe that this industry has spent the
    last two decades protecting customers' privacy. There are other
    ways to be listed, it's totally that simple. We have other
    things to do, rather than build a wireless directory, I would
    prefer to spend our time and attention building a high quality
    network, it's that simple, sir.
        Senator Smith. And Steve, I think philosophically I would
    very much agree with you that the marketplace is likely to be
    able to fix this, and as I understand, you're saying pretty
    soon that technologies will be available that the market can do
    this, and we won't need to worry about this endeavor.
        Mr. Largent. Yes, it's true.
        Senator Smith. I have to say to anybody that's providing a
    service like this, I hate to get stuff unsolicited. And, I
    voted proudly for the earlier legislation that said, don't call
    me at dinnertime, and the no-call stuff, I want consumers to
    have a choice, and frankly I hope we, in Congress are
    alleviated from the obligations to have to do anything, though
    I've got a piece of fax, ``don't fax'' legislation, we've got
    to fine tune that a little bit too, because every night when I
    go home I've got to throw away about twenty pages of faxes from
    people. Not a lot of money to pay for the paper, but I don't
    want to pay for the paper they're sending me. So these are the
    kind of things that I hope you will keep in mind, because I
    think it would be better not to have to legislate these kinds
    of things. By the same token, I am very mindful, the kind of
    calls we get from people, just upset with their privacy, their
    castle is being invaded by people they don't want to talk to,
    or they don't want to get their faxes, they don't want to hear
    their messages, so I'm caught between my own experience, my
    philosophical leanings which are to let the marketplace evolve
    this on the basis of what's good business, because I think that
    will ultimately be a better determinant as to where the lines
    ought to be drawn than Members of Congress can figure out how
    to draw them. But, Mr. Rotenberg, tell me where I'm wrong
    philosophically.
        Mr. Rotenberg. Well, I agree with you, Senator, and really
    I think this is the case where consumer organizations are not
    saying that they oppose innovation, in fact you will find in my
    testimony, I support a point that Mr. Cox made about a
    provision in the bill which I'm concerned will shut down some
    innovative solutions for the identification requirement, so we
    really do believe in supporting a dynamic industry, we really
    do support innovation, we think the benefit's there for
    consumers.
        But we also believe that you need this privacy baseline,
    and I'll tell you what's going to be worse, if the directory
    goes forward, consumers aren't just going to be paying for the
    paper in their fax machine, they're going to be paying for
    those unwanted calls on their cell phones. And that's going to
    be something that people have not experienced in the past, I
    think, Mr. Strigl is right at Verizon, I think it's a mistake
    for the industry to do this, if they want to do it, it's their
    choice, some people sign up, that's their choice. But for the
    rest of us who choose not to sign up, I think we have the right
    to get some protection, and that's why we're here today.
        Senator Smith. I think it's fair to say in light of
    comments, that time is really of the essence here, because I
    mean, there are predators who use these technologies to invade
    the space of our home, and frankly, we don't want to hear from
    them. And we certainly don't want our kids being invaded by
    them.
        So, I have no further questions, unless any of you would
    like to make a closing comment, we'll certainly make that
    available to you.
        Mr. Cox. First, not to over do the statistics here, but
    first, I don't think most carriers charge for incoming calls,
    but in addition to that, sixty some-odd percent of members are
    included, with forty percent that are numbers, but I will tell
    you over 80 percent of households are currently listed today,
    your fax number is not in the directory. So, the way your fax
    number was found was not in the directory at all. And so, I
    would say that if you look at the statistics, it's pretty
    clear, 80 percent of consumers today want to be in, 99.8
    percent of businesses are in directories today.
        And so that's just kind of a good take away to understand,
    food for thought for what Ms. Pierz was saying.
        Senator Smith. Thank you. Steve?
        Mr. Largent. Senator, if I could just say one thing, I
    think that I have a record and a reputation for working in a
    bipartisan way, and the comment I made had nothing, was not
    political, and I look forward to working in a bi-partisan way
    in the future to help move this wireless industry further and
    faster ahead.
        Senator Smith. Thank you very much.
        Ms. Pierz. If I could add one last comment as well, just
    looking, again looking at the research and the numbers of
    people that are willing to list under different situations, one
    of the important success factors, both for consumers and for
    carriers is to make sure that as many people can opt-in to this
    process as comfortably as possible, because, if you only get,
    for example, as they did in Australia, and even in France, ten,
    twelve percent of numbers listed, it's nine out of ten times
    you make $1.50 directory assistance call and are told the
    number is unlisted, thank you very much. It's frustrating for
    consumers, and it's not good for carriers, either, because you
    actually irritate people on that basis. And so, if you can
    create a baseline that lets as many people list as possible and
    protect the number, not have it appear in a phone bill, because
    that actually discloses it to the point that someone now has
    it, even if the operator doesn't tell them the number, if it
    shows up on a bill, people can continue to call you on your
    cell phone and you will replace it if you are being pressured
    or harassed, people would have to change their numbers. And so,
    creating a baseline that creates those protections for
    consumers, on all levels, allows more people to opt-in, and
    then a whole range of other services that would depend on these
    technologies being in place can be developed from there for
    competitive purposes.
        Senator Smith. Anything else? Thank you all, we're
    adjourned.
        [Whereupon, at 4:05 p.m., the hearing was adjourned.]