[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






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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.]

                                  
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