[Senate Hearing 108-956]
[From the U.S. Government Publishing Office]
S. Hrg. 108-956
THE WIRELESS 411 PRIVACY ACT
=======================================================================
HEARING
before the
COMMITTEE ON COMMERCE,
SCIENCE, AND TRANSPORTATION
UNITED STATES SENATE
ONE HUNDRED EIGHTH CONGRESS
SECOND SESSION
__________
SEPTEMBER 21, 2004
__________
Printed for the use of the Committee on Commerce, Science, and
Transportation
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
_____
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SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION
ONE HUNDRED EIGHTH CONGRESS
SECOND SESSION
JOHN McCAIN, Arizona, Chairman
TED STEVENS, Alaska ERNEST F. HOLLINGS, South
CONRAD BURNS, Montana Carolina, Ranking
TRENT LOTT, Mississippi DANIEL K. INOUYE, Hawaii
KAY BAILEY HUTCHISON, Texas JOHN D. ROCKEFELLER IV, West
OLYMPIA J. SNOWE, Maine Virginia
SAM BROWNBACK, Kansas JOHN F. KERRY, Massachusetts
GORDON H. SMITH, Oregon JOHN B. BREAUX, Louisiana
PETER G. FITZGERALD, Illinois BYRON L. DORGAN, North Dakota
JOHN ENSIGN, Nevada RON WYDEN, Oregon
GEORGE ALLEN, Virginia BARBARA BOXER, California
JOHN E. SUNUNU, New Hampshire BILL NELSON, Florida
MARIA CANTWELL, Washington
FRANK R. LAUTENBERG, New Jersey
Jeanne Bumpus, Republican Staff Director and General Counsel
Robert W. Chamberlin, Republican Chief Counsel
Kevin D. Kayes, Democratic Staff Director and Chief Counsel
Gregg Elias, Democratic General Counsel
C O N T E N T S
----------
Page
Hearing held on September 21, 2004............................... 1
Statement of Senator Allen....................................... 1
Statement of Senator Boxer....................................... 13
Prepared statement........................................... 13
Statement of Senator Brownback................................... 22
Prepared statement........................................... 22
Statement of Senator Ensign...................................... 21
Statement of Senator Smith....................................... 17
Statement of Senator Wyden....................................... 16
Witnesses
Cox, Patrick M., CEO, Qsent, Inc................................. 30
Prepared statement........................................... 31
Largent, Hon. Steve, President and CEO, Cellular
Telecommunications and Internet Association.................... 34
Prepared statement........................................... 36
Pierz, Kathleen A., Managing Partner, The Pierz Group, LLC....... 23
Prepared statement........................................... 24
Rotenberg, Marc, Executive Director, Electronic Privacy
Information Center; Adjunct Professor, Georgetown University
Law Center..................................................... 38
Prepared statement........................................... 40
Specter, Hon. Arlen U.S. Senator from Pennsylvania............... 51
Prepared statement........................................... 52
Strigl, Dennis F., President and CEO, Verizon Wireless........... 18
Prepared statement........................................... 19
THE WIRELESS 411 PRIVACY ACT
----------
TUESDAY, SEPTEMBER 21, 2004
U.S. Senate,
Committee on Commerce, Science, and Transportation,
Washington, DC.
The Committee met, pursuant to notice, at 2:30 p.m. in room
SR-253, Russell Senate Office Building, Hon. George Allen
presiding.
OPENING STATEMENT OF HON. GEORGE ALLEN,
U.S. SENATOR FROM VIRGINIA
Senator Allen. Good afternoon, I call this hearing to
order. Senator Specter was to be speaking in the first panel,
so to speak. If he doesn't get here on time, we're going to go
straight to the panel, and I know we have many witnesses we
want to hear from, so I'll make an opening statement, allow
Senator Boxer to have an opening statement in the event that
Senator Specter appears, he can make a statement, if not, we
will proceed to the witnesses who have come here. Thank you for
being with us today.
We are examining in this Committee, Senate Bill 1963, the
Wireless 411 Privacy Act, which is sponsored by Senator Specter
and Boxer. As many of us are aware, and everyone clearly in
this room are, there are more wireless telephone users now than
any time in history. There are over 160 million in the United
States. Wireless phone service has proven valuable to millions
of Americans because of their mobility, because of its service
quality, its coverage, and its reliability.
Personally, going around Virginia in an RV with a laptop
getting Internet coverage through Verizon, its not just theory,
it was great practice to not have Blackberry coverage and kind
of weak cell phone coverage. To be honest with you, in some
places, it was great to be able to access information.
Obviously, Mr. Largent would appreciate, I was on CBS
Sportsline.com, getting play-by-play of my brother's pre-season
game, and that coverage is, of course, very important to a few
people. Congressman Largent understands what's important in the
real world.
Senator McCain posed questions to 5 or 6 of the top
wireless carriers, questions on this issue. Those questions
have been responded to by those companies and they are from
Cingular, Verizon Wireless, Spring, Verizon, and T-Mobile. At
any rate, the questions and the answers will be made a part of
the record.
The facts as we proceed in this hearing, are going to be
pretty clear, but, according to the Cellular Telecommunications
and Internet Association, there are more than 180 wireless
services competing in the United States which means that's
great for consumers. Approximately 93 percent live in markets
that are served by four or more wireless providers, and nearly
98 percent of Americans live in a market that is served by
three or more providers.
Now, by all accounts, the wireless industry is intensely
competitive, and that competition continues to bring
extraordinary benefits to consumers. According to the FCC, cell
phone use in terms of minutes has increased by 22 percent per
consumer while service costs have fallen by 13 percent.
Overall, when we see this sort of a situation, consumers
are the ultimate winners in a competitive marketplace, which
enables them to determine for themselves or their businesses
what they value and what they don't value when it comes to
their mobile phones. More recently, wireless customers, both
residential and businesses, have indicated a desire to make
their wireless telephone number available to others through
directory assistance.
To meet this consumer demand, the wireless industry is
considering offering wireless directory assistance services, or
411. At the same time, there are efforts to create a nationwide
directory and that, in doing so, has raised privacy concerns
for consumers who don't want people calling them up, and want
to keep their phone numbers private, that is one of the
benefits of cell phones in some peoples' desires.
Now, today's hearing is to examine those privacy concerns
and what the industry is actively considering to address them;
when they're going to be providing, and, not all will be
providing directory assistance, some may, but at any rate, look
at the scope of it, what is being planned and what will be
available to customers.
Now, generally speaking I think each company in a free
market system ought to be able to make a decision for providing
wireless directory for itself based on its own individual
assessment of what its customers and the general marketplace
demands. Likewise, I believe that each customer should have the
freedom to make this decision for himself or herself based on
their power to select the carrier they want for their
particular needs or preferences.
I don't think it is necessarily mutually exclusive that
either you have directory assistance through a company, or you
have one that doesn't, I think that the marketplace and
companies will say, ``If you don't want your number in a
directory assistance, you don't have to opt in for it.'' And it
doesn't have to be just one way or the other, and I think that
clearly in the competitive marketplace, the companies, at least
I have faith in the companies acting that way.
So therefore, my general philosophy is before we move
forward as a government with new laws and legislation, my
preference is to allow consumers to use this vibrantly
competitive market to pick features and services that they
want. I'm hesitant to support additional regulations, however
well intended, which effectively makes the choices for
consumers.
[Responses to Senator McCain's questions to wireless
companies follow:]
Congress of the United States
Washington, DC, September 15, 2004
Mr. Gary Forsee,
Chairman and CEO,
Sprint Corporation,
Overland Park, KS.
Dear Mr. Forsee:
Recent press accounts indicate that a consortium of five of the six
national wireless carriers, with the assistance of the Cellular
Telecommunications & Internet Association, are creating a multi-carrier
database of subscribers' phone numbers in order to provide the wireless
phone numbers of their customers to consumers who call directory
assistance services (also known as ``411'' services). While presenting
an opportunity for wireless telephone consumers, including subscribers
without wireline phones and small business users, to make their
telephone numbers more widely available to friends and to potential
customers, this action also raises issues of wireless telephone number
privacy that are of great interest to the American public and to
Congress.
In response to consumer concerns about such proposed services,
several bills on wireless directory assistance have been introduced
this Congress. The Senate Committee on Commerce, Science, and
Transportation has scheduled a hearing on these services and related
legislation for Tuesday, September 21, 2004, during which testimony
will be heard from industry representatives and other interested
parties. The House of Representatives Committee on Energy and Commerce
also plans to hold a hearing on these services in the following weeks.
In anticipation of these hearings and to assist the Committees in
understanding the views of all six national wireless carriers (some of
which may not have the opportunity to testify), we would appreciate
receiving your responses to the following questions prior to the first
hearing:
1. If you offer wireless directory services, will your subscribers
be given a choice of whether to have their number(s) listed in
a directory or not? If so, how would they exercise such choice
(i.e., opt-in or opt-out), and would it vary depending on
whether it was a new or existing subscriber making the choice?
2. Do you plan to charge subscribers to keep their wireless
number(s) unlisted?
3. Are your current terms of service with customers consistent with
your responses to questions 1 and 2?
We appreciate your efforts to provide this information to the
Committees and to Congress by Monday, September 20.
Sincerely,
John McCain,
Chairman,
Senate Committee on Commerce,
Science, and Transportation.
Joe Barton,
Chairman,
House of Representatives Committee
on Energy and Commerce.
Fred Upton,
Chairman,
House of Representatives Subcommittee
on Telecommunications and the Internet.
______
Sprint
Overland Park, KS. September 20, 2004
Hon. John McCain,
Chairman,
Senate Committee on Commerce, Science, and Transportation.
Hon. Joe Barton,
Chairman,
House of Representatives Committee on Energy and Commerce.
Hon. Fred Upton,
Chairman,
House of Representatives Subcommittee on Telecommunications and the
Internet.
Dear Chairmen:
Thank you for your interest in Wireless Directory Assistance (WDA).
Provided below are responses to the questions you asked in your letter
to me dated September 15, 2004.
As you are aware, there are more wireless telephone users now than
any time in history. Many wireless users, both residential users and
businesses, wish to make their wireless telephone numbers available to
others through directory assistance. Currently, there is no convenient
method in place for wireless users to do that. To meet subscriber
demand, Sprint is considering offering WDA. Although Sprint's plans in
this area are not yet finalized, Sprint commits that the following
points will be at the core of any offering.
Question 1. If you offer wireless directory services, will your
subscribers be given a choice of whether to have their numbers(s)
listed in a directory or not? If so, how would they exercise such
choice (i.e., opt-in or opt-out), and would it vary depending on
whether it was a new existing subscriber making the choice?
Answer: Wireless numbers will only be made available to WDA if a
specific customer directs Sprint to make them available. This opt-in
method will apply to both existing subscribers and new subscribers.
Subscribers' telephone numbers will not be made available to WDA, by
default. In addition, subscribers will be able to revoke their opt-in
consent at any time.
Question 2. Do you plan to charge subscribers to keep their
wireless number(s) unlisted?
Answer: Sprint does not plan to charge existing or new subscribers
for keeping their number out of WDA listing. Also, Sprint has no plans
to charge existing or new subscribers to remove their listing from WDA.
Question 3. Are your current terms of service with customers
consistent with your responses to questions 1 and 2?
Answer: Subscriber consent will not be obtained through service
contracts. Sprint's current subscriber contracts do not specifically
address WDA. In all cases, subscribers will have to specifically direct
Sprint to make their numbers available to WDA before Sprint will do so.
Even if an older version of Sprint's service contract references
directory assistance, Sprint will adhere to the commitments listed in
response to questions 1 and 2.
Sprint believes that carrier WDA plans are consistent with
important privacy objectives and will increase customer choices. Absent
an effective opt-in WDA approach as Sprint has outlined above, inter-
modal competition will be harmed and customers who only have a wireless
phone and want to be reached will be needlessly out of touch.
Sincerely,
Gary D. Forsee.
Chairman and Chief Executive Officer.
______
Congress of the United States
Washington, DC, September 15, 2004
Mr. John D. Zeglis,
Chairman and CEO,
AT&T Wireless,
Washington, DC.
Dear Mr. Zeglis:
Recent press accounts indicate that a consortium of five of the six
national wireless carriers, with the assistance of the Cellular
Telecommunications & Internet Association, are creating a multi-carrier
database of subscribers' phone numbers in order to provide the wireless
phone numbers of their customers to consumers who call directory
assistance services (also known as ``411'' services). While presenting
an opportunity for wireless telephone consumers, including subscribers
without wireline phones and small business users, to make their
telephone numbers more widely available to friends and to potential
customers, this action also raises issues of wireless telephone number
privacy that are of great interest to the American public and to
Congress.
In response to consumer concerns about such proposed services,
several bills on wireless directory assistance have been introduced
this Congress. The Senate Committee on Commerce, Science, and
Transportation has scheduled a hearing on these services and related
legislation for Tuesday, September 21, 2004, during which testimony
will be heard from industry representatives and other interested
parties. The House of Representatives Committee on Energy and Commerce
also plans to hold a hearing on these services in the following weeks.
In anticipation of these hearings and to assist the Committees in
understanding the views of all six national wireless carriers (some of
which may not have the opportunity to testify), we would appreciate
receiving your responses to the following questions prior to the first
hearing:
1. If you offer wireless directory services, will your subscribers
be given a choice of whether to have their number(s) listed in
a directory or not? If so, how would they exercise such choice
(i.e., opt-in or opt-out), and would it vary depending on
whether it was a new or existing subscriber making the choice?
2. Do you plan to charge subscribers to keep their wireless
number(s) unlisted?
3. Are your current terms of service with customers consistent with
your responses to questions 1 and 2?
We appreciate your efforts to provide this information to the
Committees and to Congress by Monday, September 20.
Sincerely,
John McCain,
Chairman,
Senate Committee on Commerce,
Science, and Transportation.
Joe Barton,
Chairman,
House of Representatives Committee
on Energy and Commerce.
Fred Upton,
Chairman,
House of Representatives Subcommittee
on Telecommunications and the Internet.
______
January 3, 2005
Hon. John McCain,
Chairman,
Senate Committee on Commerce, Science, and Transportation,
Washington, DC.
Dear Chairman McCain:
Thank you for the opportunity to explain AT&T Wireless' policies
regarding the planned Wireless 411 database. We are pleased to respond
to your letter dated September 15, 2004.
Protecting customer privacy is one of our highest priorities, and
this commitment is reflected in our approach to Wireless 411. I have
attached a document that provides an in-depth response to the specific
questions outlined in your letter. You will note when you review our
response that it is our intention only to participate in a Wireless 411
database if it is completely optional for our customers, is of no cost
to participating or non-participating customers and meets the strict
standards of our privacy policy. If a participating customer later
decides to remove his/her wireless number from the database, it will be
quick and easy to do so.
We believe that Wireless 411 service can offer significant benefits
to our customers. Laws that restrict the offering of wireless 411
service could hamper our delivery of this valuable benefit.
More small businesses and sole proprietors are using
wireless phones as their primary or only means of voice
communications with customers and suppliers. We do not believe
that this technology choice should put a business at a
disadvantage in comparison to competitors that utilize land
line phones and can therefore list their phone numbers. The
Wireless 411 service will allow our business subscribers to
make their phone numbers accessible to their customers and
suppliers.
In addition, a growing number of consumers have chosen to
use a wireless phone as their only phone. These consumers
should have an opportunity to make their contact information
available to friends and relatives through directory assistance
services.
Finally, we believe there are customers who will choose to
participate in Wireless 411 for the peace of mind that comes
with having their phone number accessible in an urgent
situation.
Again, thank you for the opportunity to share our policies
concerning our planned Wireless 411 service. We are confident that
Wireless 411 offers significant consumer benefits, and we remain
committed to providing our wireless service in a way that protects
customer privacy.
Sincerely,
John D. Zeglis,
Chairman and CEO,
AT&T Wireless.
Cc: Chairman John McCain
Chairman Joe Barton
______
AT&T Wireless' Response to September 15, 2004 Letter re: Wireless 411
1. If you offer wireless directory services, will your subscribers
be given a choice of whether to have their number(s) listed in
a directory or not? If so, how would they exercise such choice
(i.e., Opt-in or opt-out), and would it vary depending on
whether it was a new or existing subscriber making the choice?
Customers will be given a choice whether to have their number(s)
listed in the database. Only customers who specifically request
to be included will have their number available for lookup
through Wireless 411. In other words, customers must opt in by
taking an affirmative step to make their numbers available.
This policy applies to all of our customers.
2. Do you plan to charge subscribers to keep their wireless
number(s) unlisted?
No. Just like today, we will not charge to keep a number unlisted.
3. Are your current terms of service with customers consistent with
your responses to questions 1 and 2?
Yes. All AT&T Wireless customers--regardless of the language in
earlier contracts--will have the choice whether to be included
in the Wireless 411 database. In addition, no customer will be
charged to keep their phone number unlisted. We believe this
approach best meets the desires of consumers.
As of June 2004 the language in the AT&T Wireless Privacy Policy,
which is referenced in our Service Agreement reads as follows:
``AT&T Wireless does not currently disclose wireless numbers in
directory assistance listings or published directories. If we
do so in the future, you will be able to choose whether your
number is listed.''
It should be noted that in addition to the above privacy measures,
the names and numbers included in the Wireless 411 database will not be
printed in a directory or published online. The database will not be
for sale to third parties. Wireless 411 service will only allow 411
callers to get a wireless subscriber's phone number if that subscriber
chooses to make it available, and then only in response to a specific
request for an individual. In addition, customers who have chosen to
list their numbers can choose to remove their numbers from the database
at any time. We plan to update customer preferences in the database on
a daily basis.
______
Congress of the United States
Washington, DC, September 15, 2004
Mr. Stanley T. Sigman,
President and CEO,
Cingular Wireless,
Atlanta, GA.
Dear Mr. Sigman:
Recent press accounts indicate that a consortium of five of the six
national wireless carriers, with the assistance of the Cellular
Telecommunications & Internet Association, are creating a multi-carrier
database of subscribers' phone numbers in order to provide the wireless
phone numbers of their customers to consumers who call directory
assistance services (also known as ``411'' services). While presenting
an opportunity for wireless telephone consumers, including subscribers
without wireline phones and small business users, to make their
telephone numbers more widely available to friends and to potential
customers, this action also raises issues of wireless telephone number
privacy that are of great interest to the American public and to
Congress.
In response to consumer concerns about such proposed services,
several bills on wireless directory assistance have been introduced
this Congress. The Senate Committee on Commerce, Science, and
Transportation has scheduled a hearing on these services and related
legislation for Tuesday, September 21, 2004, during which testimony
will be heard from industry representatives and other interested
parties. The House of Representatives Committee on Energy and Commerce
also plans to hold a hearing on these services in the following weeks.
In anticipation of these hearings and to assist the Committees in
understanding the views of all six national wireless carriers (some of
which may not have the opportunity to testify), we would appreciate
receiving your responses to the following questions prior to the first
hearing:
1. If you offer wireless directory services, will your subscribers
be given a choice of whether to have their number(s) listed in
a directory or not? If so, how would they exercise such choice
(i.e., opt-in or opt-out), and would it vary depending on
whether it was a new or existing subscriber making the choice?
2. Do you plan to charge subscribers to keep their wireless
number(s) unlisted?
3. Are your current terms of service with customers consistent with
your responses to questions 1 and 2
We appreciate your efforts to provide this information to the
Committees and to Congress by Monday, September 20.
Sincerely,
John McCain,
Chairman,
Senate Committee on Commerce,
Science, and Transportation.
Fred Upton,
Chairman,
House of Representatives Subcommittee
on Telecommunications and the Internet.
Joe Barton,
Chairman,
House of Representatives Committee
on Energy and Commerce.
______
September 17, 2004
To: John McCain, Chairman,
Senate Committee on Commerce, Science, and Transportation.
Joe Barton, Chairman,
House of Representatives Committee on Energy and Commerce.
Fred Upton, Chairman,
House of Representatives Subcommittee on Telecommunications and
Internet.
Thank you for the opportunity to provide specific information on
Cingular's approach to offering wireless directory assistance to our
customers. There has been a great deal of misinformation reported on
this topic and I am pleased to have the chance to set the record
straight by communicating directly with the Committee members that are
reviewing this matter. Cingular is dedicated to ensuring that the
customer's right to choose is respected.
Your request consisted of three questions which I have restated and
answered below:
1. If you offer wireless directory services, will your subscribers
be given a choice of whether to have their number(s) listed in
the directory or not? If so, how would they exercise such
choice, and would it vary depending on whether it was a new or
existing subscriber making the choice?
Cingular subscribers will be given the choice to have their
number(s) listed through an opt-in method. Opt-in will not be
tied to the selection of a service plan or any other available
feature, but will be a stand-alone option that may be presented
to the customer at the point-of-sale, during a call into
customer service or on Cingular's website. The opt-in process
will be the same for both new and existing customers.
2. Do you have any plans to charge subscribers to keep their
wireless number(s) unlisted?
Cingular subscribers will not be charged if they elect to keep
their wireless number(s) unlisted. We believe that there should
not be any financial disincentives for those customers that
choose not to participate in listing their number(s). In
addition, there will not be any charges applied if a customer
that has previously opted-in changes his mind and asks to be
removed from the database.
3. Are your current terms of service with customers consistent with
your responses to questions 1 and 2?
Yes.
We at Cingular are committed to protecting the privacy of our
subscribers and are taking the necessary precautions to ensure that if
a customer elects to be listed; his or her wireless account information
will not be used for any purpose other than directory assistance. I
believe that sufficient safeguards exist to protect the privacy rights
of consumers and that wireless carriers have an inherent vested
interest in preserving them.
Stan Sigman,
President and CEO,
Cingular Wireless.
______
Congress of the United States
Washington, DC, September 15, 2004
Mr. Timothy M. Donahue,
President and CEO,
Nextel Communications,
Reston, VA.
Dear Mr. Donahue:
Recent press accounts indicate that a consortium of five of the six
national wireless carriers, with the assistance of the Cellular
Telecommunications & Internet Association, are creating a multi-carrier
database of subscribers' phone numbers in order to provide the wireless
phone numbers of their customers to consumers who call directory
assistance services (also known as ``411'' services). While presenting
an opportunity for wireless telephone consumers, including subscribers
without wireline phones and small business users, to make their
telephone numbers more widely available to friends and to potential
customers, this action also raises issues of wireless telephone number
privacy that are of great interest to the American public and to
Congress.
In response to consumer concerns about such proposed services,
several bills on wireless directory assistance have been introduced
this Congress. The Senate Committee on Commerce, Science, and
Transportation has scheduled a hearing on these services and related
legislation for Tuesday, September 21, 2004, during which testimony
will be heard from industry representatives and other interested
parties. The House of Representatives Committee on Energy and Commerce
also plans to hold a hearing on these services in the following weeks.
In anticipation of these hearings and to assist the Committees in
understanding the views of all six national wireless carriers (some of
which may not have the opportunity to testify), we would appreciate
receiving your responses to the following questions prior to the first
hearing:
1. If you offer wireless directory services, will your subscribers
be given a choice of whether to have their number(s) listed in
a directory or not? If so, how would they exercise such choice
(i.e., opt-in or opt-out), and would it vary depending on
whether it was a new or existing subscriber making the choice?
2. Do you plan to charge subscribers to keep their wireless
number(s) unlisted?
3. Are your current terms of service with customers consistent with
your responses to questions 1 and 2?
We appreciate your efforts to provide this information to the
Committees and to Congress by Monday, September 20.
Sincerely,
John McCain,
Chairman,
Senate Committee on Commerce,
Science, and Transportation.
Joe Barton,
Chairman,
House of Representatives Committee
on Energy and Commerce.
Fred Upton,
Chairman,
House of Representatives Subcommittee
on Telecommunications and the Internet.
______
September 21, 2004
Hon. John McCain,
Chairman,
Committee on Commerce, Science, and Transportation,
United States Senate,
Washington, DC.
Hon. Joe Barton,
Chairman,
Committee on Energy and Commerce,
U.S. House of Representatives,
Washington, DC.
Hon. Fred Upton,
Chairman,
Subcommittee on Telecommunications and the Internet,
House Energy and Commerce Committee,
Washington, DC.
Dear Chairmen McCain, Barton and Upton:
Thank you for your September 15, 2004, letter regarding wireless
directory assistance and Nextel Communications' interests in providing
such services to our customers. In furtherance of our efforts to meet
the demands for new services and applications, Nextel will offer
wireless directory assistance only to those who are interested. Nextel
customers will be provided information on this new option, including
instructions on ``opting-in'' or ``opting-out'' of the service.
We will do so under the strictest adherence to our strong policy on
protecting customer privacy. In response to your specific questions,
please be advised of the following:
1) Nextel will offer wireless directory assistance to its customers,
each of whom will determine whether their number will be listed
in the directory. Further, if a customer chooses to have their
number included in the directory, it will be done only if the
subscriber gives a clear, unambiguous and verifiable
affirmation of their decision and at no charge. This will apply
to existing and prospective customers. For those subscribers
who wish to remain unlisted they will not have to take any
action.
2) For those customers who choose not to have their numbers listed
in our wireless directory, Nextel will not charge any fee, nor
impose any fine or penalty. Further, customers who become
listed may choose to ``opt-out'' of the program at any time and
at no charge.
3) Nextel is in the process of modifying both its subscriber
agreement and its privacy policy to reflect the guarantee that
our customers will have the choice of participating in our
wireless directory assistance, with no charge either for
participation or non-participation in the program.
Nextel and its employees are strongly committed to protecting the
privacy of our customer, including under one directory assistance
program. Nextel will not publish the wireless directory assistance
information or provide access to the directory assistance database to
any entity other than the directory assistance provider. Be assured
that we will take all necessary steps to protect our customers' privacy
within the dynamic wireless communications market.
Sincerely,
Tim Donahue,
President and Chief Executive Officer,
Nextel Communications.
______
Congress of the United States
Washington, DC, September 15, 2004
Mr. Robert Dotson,
President and CEO,
T-Mobile USA,
New York, NY.
Dear Mr. Dotson:
Recent press accounts indicate that a consortium of five of the six
national wireless carriers, with the assistance of the Cellular
Telecommunications & Internet Association, are creating a multi-carrier
database of subscribers' phone numbers in order to provide the wireless
phone numbers of their customers to consumers who call directory
assistance services (also known as ``411'' services). While presenting
an opportunity for wireless telephone consumers, including subscribers
without wireline phones and small business users, to make their
telephone numbers more widely available to friends and to potential
customers, this action also raises issues of wireless telephone number
privacy that are of great interest to the American public and to
Congress.
In response to consumer concerns about such proposed services,
several bills on wireless directory assistance have been introduced
this Congress. The Senate Committee on Commerce, Science, and
Transportation has scheduled a hearing on these services and related
legislation for Tuesday, September 21, 2004, during which testimony
will be heard from industry representatives and other interested
parties. The House of Representatives Committee on Energy and Commerce
also plans to hold a hearing on these services in the following weeks.
In anticipation of these hearings and to assist the Committees in
understanding the views of all six national wireless carriers (some of
which may not have the opportunity to testify), we would appreciate
receiving your responses to the following questions prior to the first
hearing:
1. If you offer wireless directory services, will your subscribers
be given a choice of whether to have their number(s) listed in
a directory or not? If so, how would they exercise such choice
(i.e., opt-in or opt-out), and would it vary depending on
whether it was a new or existing subscriber making the choice?
2. Do you plan to charge subscribers to keep their wireless
number(s) unlisted?
3. Are your current terms of service with customers consistent with
your responses to questions 1 and 2?
We appreciate your efforts to provide this information to the
Committees and to Congress by Monday, September 20.
Sincerely,
John McCain,
Chairman,
Senate Committee on Commerce,
Science, and Transportation.
Joe Barton,
Chairman,
House of Representatives Committee
on Energy and Commerce.
Fred Upton,
Chairman,
House of Representatives Subcommittee
on Telecommunications and the Internet.
______
T-Mobile USA, Inc.
Bellevue, WA, September 20, 2004
Hon. John McCain,
U.S. Senate,
Washington, DC.
Hon. Joe Barton,
U.S. House of Representatives,
Washington, DC.
Hon. Fred Upton,
U.S. House of Representatives,
Washington, DC.
Dear Chairmen McCain, Barton, and Upton,
This letter responds to your request for information about T-
Mobile's efforts to offer subscribers the opportunity to list their
wireless numbers in an electronic 411 directory, set forth in your
letter dated September 15, 2004. T-Mobile USA, Inc. and a number of
other wireless carriers, with the assistance of the Cellular
Telecommunications & Internet Association, are in the process of
creating 411 service for wireless subscriber phone numbers. First, I'd
like to provide you with an introduction to T-Mobile.
T-Mobile is one of the fastest growing nationwide wireless service
providers, offering digital voice, messaging, and high-speed wireless
data services to more than 15.4 million customers in the United States.
A cornerstone of T-Mobile's strong consumer appeal has been its Get
More business strategy to provide customers with the best overall
value in their wireless service. T-Mobile has more than 22,000
employees across the country dedicated to delivering on its Get More
strategy to provide customers with more minutes, more features, and
more service. These efforts were recognized in the J.D. Power &
Associates' 2004 U.S. Wireless Regional Customer Satisfaction Index
Study, in which T-Mobile received the highest rankings in all six
regions of the country. Mobile professionals and homeowners, including
those who have replaced their traditional wireline phone with a
wireless phone, have expressed a desire to have their wireless numbers
listed in a wireless directory. T-Mobile plans to offer this compelling
service to customers who request it and, in so doing, is working with
other wireless carriers and the CTIA to design this service to meet our
customers' expectations of privacy. (It is worth noting that some
landline carriers may not be as eager to provide wireless customers who
have ``cut the cord'' with the opportunity to be listed in a wireless
directory.)
As a result of our Get More commitment, one issue has remained
foremost in T-Mobile's mind throughout the design and development of
wireless 411 service--the privacy expectations of our subscribers. To
that end, T-Mobile is working to ensure that the design of the database
of wireless numbers contains privacy protections for subscribers who
choose to be listed in a 411 database. These protections include
listing a subscriber's wireless number in the 411 database only after
the subscriber has made the choice to ``opt-in'' to the service and
ensuring that the numbers in the 411 database will not be sold to
telemarketers.
Below are the questions posed in your letter and T-Mobile's
responses.
1. If you offer wireless directory services, will your subscribers
be given a choice of whether to have their number(s) listed in
a directory or not? If so, how would they exercise such choice
(i.e., opt-in or opt-out), and would it vary depending on
whether it was a new or existing subscriber making the choice?
If T-Mobile offers wireless directory services, T-Mobile
subscribers will be required to affirmatively opt-in to the electronic
411 directory. T-Mobile includes in its written service agreement an
opt-in box on the front page that customers may check to list their
numbers in the wireless directory. This opt-in provision is clearly
identified under a section entitled ``Important Customer Information.''
Customers who activate service online, or via telesales, also will be
required to affirmatively opt-in to list their numbers in the
directory.
Like new customers, existing customers must opt-in to list their
numbers in the wireless directory. T-Mobile is determining how best to
communicate the opt-in election to existing customers. T-Mobile is
looking into providing customers the choice to opt-in through existing
password-protected, personalized customer Web pages, where they manage
their accounts online.
2. Do you plan to charge subscribers to keep their wireless
number(s) unlisted?
T-Mobile does not plan to charge subscribers to keep their wireless
numbers unlisted, regardless of the quantity of numbers the subscriber
wishes to keep unlisted. This decision is consistent with the policy of
other carriers participating in the wireless directory.
3. Are your current terms of service with customers consistent with
your responses to questions 1 and 2?
As noted in response to question 1, T-Mobile's service agreement
for new customers contains an opt-in provision in order for customers
to choose to list their number in the wireless 411 directory. T-
Mobile's service agreement contains no provision authorizing charging
customers for unlisted numbers and, as noted above, T-Mobile has no
plans to charge subscribers to keep their wireless numbers unlisted. It
bears repeating that whether a subscriber is new to T-Mobile or is one
of our many loyal, existing customers, and whether he or she is
entering into a paper contract in a retail store or an electronic
contract online, T-Mobile plans to include wireless numbers in the 411
database only when the subscriber has affirmatively elected to be
included in such directory.
In conclusion, we are confident that our opt-in approach addresses
our customers' desire for wireless directory service and their desire
for choice and privacy. I hope this information is useful to you and
please know that T-Mobile will gladly provide additional information at
your request.
Sincerely,
Robert Dotson,
President and Chief Executive Officer,
T-Mobile USA, Inc.
Senator Allen. Again, I do want to thank our witnesses for
being with us today, in the event we move to the witnesses
after Senator Boxer's statements, and Senator Wyden, are you
going to want an opening statement? I know, but are you going
to want to make a statement as well? All right, after
statements from Senators who are here, in the event that
Senator Specter doesn't come in, I'll just go like this, that
will be the signal so that you all can move forward so we can
hear from you all as well. So that, with the concurrence of
Senator Wyden, we'd now like to hear from Senator Boxer, one of
the sponsors of this legislation.
Senator Boxer.
STATEMENT OF HON. BARBARA BOXER,
U.S. SENATOR FROM CALIFORNIA
Senator Boxer. Thank you so much, Senator Allen, and I ask
that my full statement be submitted for the record.
[The prepared statement of Senator Boxer follows:]
Prepared Statement of Hon. Barbara Boxer, U.S. Senator from California
Mr. Chairman, thank you very much for holding this hearing. I also
want to thank Senator Specter for inviting me to take the lead with him
to protect consumer privacy as the wireless phone industry moves
forward with a 411 directory of cellphone users.
The Specter-Boxer ``Wireless 411 Privacy Act'' would create a
national privacy standard for wireless 411. It would give consumers a
choice as to whether or not their cell phone numbers are listed in a
directory, it would prohibit cell phone companies from charging
customers for keeping their numbers private, it would allow the
directory to connect a subscriber to someone trying to reach them but
it would not allow the directory to give out telephone numbers, and it
prohibits the publication of cell phone numbers.
These are protections consumers want. Both the AARP and Consumers
Union have come out in support of the legislation.
There are more than 169 million wireless subscribers in the United
States who will be affected by the creation of a wireless directory.
These customers have always had control over who has access to their
wireless telephone numbers. But, a wireless directory threatens that
control. And, it threatens to raise consumer bills as well. That is
because wireless customers in the U.S. pay for all incoming and
outgoing calls. If consumers are listed without their consent, then
consumers could be unfairly incurring unwanted charges or using up
their allotted minutes of use by receiving calls they do not want. Our
bill seeks to protect consumers from those threats.
Having reviewed the testimony of the experts here today, and in
response to concerns some of my colleagues on this Committee have
expressed, I have filed a manager's amendment to the 411 Wireless
Privacy Act:
First, due to concerns with the language requiring that the
directory not reveal telephone numbers, I have removed that
language.
Second, I have also included state preemption language in
order to establish a national standard of protection for the
wireless directory and to provide the market with regulatory
certainty.
Third, for those small businesses who expressly wish to have
their cellphone numbers listed, I have included an opt-in
choice for consumers to allow a directory to publish their
numbers.
Lastly, because numbers will be distributed from the
directory to anyone who requests a number, the manager's
amendment creates an across the board opt-in choice for
consumers.
The industry has said it can meet this level of protection and it
is now up to us to provide those protections in the law in order to
ensure that customers are treated fairly.
The industry claims that the legislation we are discussing today is
a solution in search of a problem. But, our constituents have made it
clear that an unregulated wireless 411 directory is a problem.
Mr. Chairman, most consumers do not know that there is boiler plate
language in most existing wireless contracts that allow carriers to
include wireless numbers in a directory. That is, almost all consumers
have unknowingly already agreed to having their number included in a
directory. And, while the industry has claimed it is voluntarily
committed to a certain level of consumer protections, without a law,
there is nothing to prevent a carrier from changing its mind.
The industry also claims that a highly competitive cell phone
market empowers consumers simply to change to another provider if they
do not like the terms and conditions of a new wireless directory. And
Verizon, to its credit, has chosen not to participate in the directory
because of its concerns that a directory threatens consumer privacy.
But, Mr. Chairman, every consumer, regardless of cellphone service
provider, should have a right to privacy. Given that all consumers are
free to control who has their phone numbers today, they should remain
free to have that control. A wireless directory may work well for a
minority of consumers without strong privacy protections, but it can
only work well for everyone if we establish privacy protections in law.
I want to thank you again for holding this hearing and I look
forward to hearing the testimony from our witnesses today.
Senator Boxer. And what I want to do say, the theory of
waiting until there are problems--but I can tell you right now,
chaos will reign when our constituents start getting calls on
their cell phones, which they consider, in many ways, an
adjunct to their land phone, which they consider, in many
cases, a phone they carry for urgent business. If you want to
wait until chaos breaks loose in your state, that's your right.
But, Senator Specter and I have teamed up in a bi-partisan way
where common sense dictates that we ought to move forward in a
fair way. Now, there's a big difference between your landed
phone, your grounded phone and your wireless phone, in this
way. Senators, when our constituents get a call, an unwanted
call on your cell phone, guess who pays for it? Our
constituents. This is a total outrage. And if we start seeing
our names published in directories where anyone can call us in
the middle of the workday, can start bothering our children,
many of whom have these phones, that they're told, Only use it
in emergency, I'll tell you that in my opinion, the wrong side
of the issue to be on. Now, I know these companies well. I've
got a lot of them in my state. I love them, and I'm a good
customer of theirs. But all the promises to the contrary where,
``We won't sell your name,'' and ``We won't do this and that
and the other,'' we already know what goes on in the business
world, it's the bottom line. Our names represent a dollar sign.
And all that is well and good if I decide to opt in. And that's
what we're saying. If we want to have our name in a directory,
whether it's a private directory so that when someone calls 411
they get my number, fine. Or a published directory, if I want
to be in that, fine. And the wireless companies will be very
good at persuading people, I think, that it's to their
advantage to have their phone listed. And that still, that's
their job. But I believe I'm here for a reason. And that is to
protect people. And I would like to ask unanimous consent that
a letter from the AARP endorsing the Specter-Boxer legislation
be placed in the record at this time.
[The information referred to follows:]
AARP
Washington, DC, September 21, 2004
Hon. Barbara Boxer,
Washington, DC.
Dear Senator Boxer:
AARP wishes to commend your leadership in introducing S.1963, the
Wireless 411 Privacy Act, legislation on which the Senate Commerce,
Science, and Transportation Committee will shortly hear testimony.
S.1963 would ensure that consumers have a choice as to whether their
cell phone number is included in a wireless directory and protection
against charges for keeping it private. Congress should not leave this
matter to industry discretion.
While many subscribers to more traditional landline telephone
service also want to keep their home numbers private, cell phone
subscribers have additional incentives to do so. First, the privacy of
wireless subscribers has always been safeguarded. Therefore, many cell
phone users now expect to receive calls only from those individuals to
whom they have personally given their number. Second, wireless service
providers, unlike their landline counterparts, charge for incoming as
well as outgoing calls. As a result, wireless users have to pay for any
unwanted, incoming calls.
A recent study by the AARP Public Policy institute confirms that
cell phone owners place a high value on the privacy of their cell phone
numbers. According to the study, an overwhelming majority of cell phone
owners view the current lack of a publicly available wireless directory
as a positive and say they do not want to have their number included in
such a directory if it is created. In fact, they believe that no
wireless phone number should be added to a wireless directory unless
the cell phone owner specifically requests it. A copy of the study is
enclosed for your review.
We believe that AARP members and residential consumers in general
deserve the right to maintain the maximum amount of control over the
disclosure of their wireless phone number. We strongly support your
effort to enact industry-wide privacy protections for cell phone
subscribers now. The industry is poised to implement a wireless
directory assistance service; Congressional action could not be more
timely.
If you have any questions or concerns, please do not hesitate to
call.
Sincerely,
Michael Naylor,
Director of Advocacy.
Enclosure
Senator Boxer. And also, a consumer union in support of our
bill that comes from testimony that was given on September,
actually, today's testimony. We ask that that be placed in the
record.
What we have done, what I have done working with Senator
McCain and others, is to hear some of the problems that certain
Senators had with our original bill, two of them are here, and
we have filed a managers' amendment that takes care of their
problems. Basically, hopefully this will be marked up, I know
we had bi-partisan support on this Committee, and this
managers' amendment, I want to take a minute to explain it, due
to concerns that the language requiring that the directory not
reveal telephone numbers if somebody has, in fact, opted in, we
initially said, ``Just connect them to the party.'' Senators
Smith and Wyden had a problem with that, we wrote an amendment,
we have fixed that, in the managers' amendment, so you will be
able to get the number if the person asks for that number and
they have received permission.
Second, we have language to establish a national standard
of protection so the market has regulatory certainty. We have
in the managers' amendment an across the board opt-in choice
for all consumers, so we don't make the distinction between
existing consumers and future consumers, everyone has a chance
to opt-in to the system. So, what you'll hear from the industry
today, and God bless them, we're discussing a solution in
search of a problem. Well, I've lived my life awhile. I know
what happens when people start getting calls they don't want.
That's why we have a ``no call'' list, which passed this Senate
and is the law of the land. And if you think that was an outcry
from the people, imagine our families that have several cell
phones, and what is going to be on us if we don't move on this.
I think Senator Specter had the solution, I think he did a good
job. Now I'm working on a managers' amendment to make it
acceptable to a broader group of Senators. I urge you to
support this and not wait for chaos to break out with these
unwanted calls that invade someone's privacy. There's going to
be a backlash, and then we'll have to deal with a mess. I think
we can do this in a simple way, you want to be listed? Simply
put your name on the line. You don't want to be listed? You
don't have to be listed, pretty simple, pretty American to me.
I think that privacy is an American value, we value our
privacy. And again, I'll close with this: I have a little
grandson who is about to get a cell phone for emergencies. And
these kids don't know, somebody could get their phone number,
could call them, could con them, to say ``Meet me at the
corner, I'm calling because your Mom said meet me at the
corner.'' You're walking into a mess. And I would appeal with
all my heart and soul to the industry instead of fighting this,
to come with us, and craft this good bill with us, and do
something that will make you feel proud, instead of just
fighting for something that's going to wind up to be a giant
mess. Thank you very much. I hope Senator Specter shows up, if
he doesn't, I think I've spoken for him, in some ways. I think
he could speak for himself probably better, but I think he
feels as strongly as I do on this. Thank you.
Senator Allen. Thank you, Senator Boxer, now we'd like to
hear from Senator Wyden.
STATEMENT OF HON. RON WYDEN,
U.S. SENATOR FROM OREGON
Senator Wyden. Thank you, Chairman, thank you for holding
this hearing. We hope our friend and colleague Senator Specter
does come, but I think Senator Boxer has accounted well for
this cause. I particularly want to commend Senator Boxer for
her willingness to work with myself, Senator Smith, Chairman
McCain, and others on the question of the managers' amendment,
because I think we're moving now toward having a good
bipartisan consensus on this issue. I have long felt that a
wireless directory assistance service would have to offer in a
certain way, different from ordinary directory assistance
would, in effect, be a recipe for consumer confusion. It sounds
to me like it would be better to have a single, integrated
directory assistance service where you could call and get both
a person's regular number and cell phone number, if, and I want
to emphasize if, he or she chose to have both listed. And so
what Senator Boxer and Senator Specter have done, in my view,
it seems to me they have empowered the consumer, they've said
the guiding principle ought to be consumer choice. Nobody
should have their cell phone number listed in a directory
service unless they affirmatively want to. Nobody ought to have
to pay to keep their cell phone number private. At the same
time, the Boxer-Specter legislation acknowledges that folks use
their cell phones in different ways. Some people use it
infrequently, say a car breaks down, some use it as a private
line to stay in close touch with a spouse or a child, some use
it for business, some use it as their only phone, and I'm
always stunned at how many people use their cell phone, in
effect, as a full replacement for ordinary land line phones. So
people have different views on whether and how they want the
number to be available and it ought to be the policy of this
Committee, the Committee that takes a lead on these issues, to
ensure that consumers are fully empowered to make the choice. I
think there are a number of issues from the standpoint of how
we look today at this question that need to be examined. I've
been told, for example, that some cell phone subscriber
agreements have buried in them somewhere a provision saying
that the carrier reserves the right to list the user's number
in a directory. Now, of course, we're going to hear from some
carriers who currently say that they won't do that any longer,
but I'm not convinced, and remain concerned that not all
subscriber agreements reflect the carriers' current statements
on the subject. So I think that's one we ought to examine, and
whether, if that's the case, they plan to change the language
in the subscriber agreements.I'm also pleased as I know my
friend and colleague Senator Smith is, that Pat Cox is here,
he's had a long history in our state of being involved in the
technology sector and giving us very valuable counsel. So, Mr.
Chairman, I think we can get this worked out. You and I have
teamed up often, Senator Boxer and Senator Smith, and I think
with the managers' amendment in particular we're a long way to
building a good bipartisan consensus, and moving ahead and I
thank you for holding the hearing.
Senator Allen. Thank you, Senator Wyden. Senator Smith,
would you like to make an opening statement since you've been
referenced?
STATEMENT OF HON. GORDON H. SMITH,
U.S. SENATOR FROM OREGON
Senator Smith. Well, Mr. Chairman, I think Senator Wyden
gave an opening statement very similar to my own. So in the
interest of time, let me associate my remarks with Senator
Wyden, and welcome Mr. Pat Cox from Houston, we appreciate his
coming here, and participating in a very important hearing, so,
thank you.
Senator Allen. Thank you, Senator Smith. Panel, please come
forward. Let me welcome our panel, it's a distinguished panel
who will shed light on this issue. In reading some of the
testimony, it seems like there's a great deal of agreement in
the principles, it's a question of how to effectuate it. Let me
introduce you, if you don't mind, we'll go in the order in
which you all are seated here with first Mr. Strigl, let me
first introduce who each of you are, and then hear from you
first. Mr. Dennis F. Strigl, President and Chief Executive
Officer of Verizon Wireless. Next is Mrs. Kathleen Pierz, who
is the Managing Partner of the Pierz Group. Then we have Mr.
Patrick M. Cox, who is CEO of Qsent of Portland, Oregon. Then
we have former Congressman, Steve Largent who is President and
Chief Executive Office of Cellular Telecommunications &
Internet Association, and finally, last but not least, Mr. Mark
Rotenberg, the Excutive Director for Electronic Privacy
Information Center, otherwise known as EPIC. Thank you,
gentlemen, and lady, for being with us this afternoon, we'd
first like to hear from you, Mr. Strigl.
STATEMENT OF DENNIS F. STRIGL, PRESIDENT AND CEO, VERIZON
WIRELESS
Mr. Strigl. Mr. Chairman, thank you for the opportunity to
testify today, members of the Committee, it's very nice to be
before you today, and thank you for holding this hearing on
this very important privacy issue. It is my understanding that
the legislation we're here to discuss today assumes that a
wireless directory is a given. With that, if the purpose of
today's hearing is to determine if a wireless directory can
protect a consumer's privacy, my answer is ``No,'' it cannot.
And therefore, this project should not go forward.
The wireless industry over the last two decades has built
an intensely competitive market, one that continues to bring
extraordinary benefits and choice to consumers. But against
that backdrop of competition and consumer choice, I think the
wireless industry is missing the boat when it comes to creating
a wireless telephone directory. It's a subject that's
controversial, not only with our customers, but also within the
industry itself. We at Verizon Wireless think that a wireless
directory is a terrible idea. Not only the customers oppose it,
but now you've asked us to appear here today to justify the
idea, and I submit that it would be far better for the industry
to abandon this needless project, and instead move ahead to
devote our time and resources to better serve our customers.
Any wireless customer today who wants a listing can already get
one. And, they can get it without charge from Internet
telephone directories such as Verizon Super Pages.com or
Switchboard.com. The bottom line is this: Verizon Wireless will
not participate in the plan you'll be hearing about today, we
will not publish our customers' cell phone numbers, and here's
why. Since the beginning, this industry has not published
wireless phone numbers. We did this consciously for the sake of
preserving customers' privacy, and control over their bills,
and discouraging interruptions from unwanted calls. Those basic
reasons have not changed. In fact, we see more reason today
than ever to protect a consumer's privacy. The floodgates are
open to spam, viruses, telemarketing, and other unwanted,
unsolicited messages on land line phones, on computers, and in
mailboxes. We think our customers view their cell phones as the
one place where they do not face these intrusions. Where they
have control over who calls them, and to whom they give the
number. And if there's any doubt, our customers and many of
your constituents are reiterating loudly and clearly that they
don't want their wireless phone numbers published. I made a
speech in June that was widely reported in the press in which I
said that a directory for the wireless industry was a dumb
idea. Since then, I've received countless letters on this
subject from customers, typically they say, ``Please keep my
cell phone free from telemarketers and unsolicited callers.'' I
have not received one single letter from any of our thirty
million customers saying that they want their wireless number
in a directory.
It is my belief that the people who want a wireless
directory are the people who are looking to reach somebody, not
the people who will be reached. The Pierz Group research itself
reports that 89 percent of wireless customers do not want their
number listed in directory assistance service. So why are we
jeopardizing the privacy for something customers don't even
want? Clearly, there is no grounds or customer demand for a
directory that would justify putting privacy in jeopardy. To
date, the wireless industry has a strong record of proactive
steps to preserve customers' privacy in an intrusive world.
We've surrounded our customers' information with a wall of
privacy, aggressively investigating and prosecuting spammers,
deploying and updating anti-spam filters, and fighting to make
telemarketing solicitation calls illegal. Why would we want to
tear down that wall after spending the last two decades
building and fortifying it? Verizon Wireless does not view the
proposed opt-in approach as a solution. We are concerned that
customers will see ``opt-in'' as a disingenuous foot in the
door leading to opt-out clauses and fees for not publishing
numbers. Further, opt-in is an all or nothing proposition, it
does not give customers any control over how and to whom their
information is revealed. To date, the wireless industry has
been a great American success story for consumers and for the
economy, how fast and far the story continues in our third
decade of operation depends upon the wireless industry
remaining vigilant keepers of the privacy frame, while building
more capacity, adding more advanced services in wireless
products to our consumers, and also, I would encourage
regulators, especially at the state and local level to allow
the vibrant, strong, competitive marketplace to work. Thank you
very much, Mr. Chairman, I look forward to the discussion
today, and I'll be happy to answer questions.
[The prepared statement of Mr. Strigl follows:]
Prepared Statement of Dennis F. Strigl, President and CEO,
Verizon Wireless
Mr. Chairman, thank you for giving me the opportunity to testify
here today and for your interest in this very important privacy issue.
I also want to acknowledge Senator Boxer's strong interest in wireless
privacy issues as well as my colleagues here at the table with me.
I believe that the competitive culture of the wireless industry
drives the decisions our industry and my company make, and warns us of
the dangers of unnecessary and counterproductive government regulation
of a highly competitive market such as ours.
The wireless industry is intensely competitive, and that
competition continues to bring extraordinary benefits to consumers. In
addition to the six national carriers, several regional carriers as
well as countless local providers compete head-to-head every day.
Ninety seven percent of mobile customers can choose between at least
three wireless carriers, and thirty percent of the population has a
choice of 7 or more providers.
The wireless industry continues to introduce innovative pricing
plans and service offerings, invest in and upgrade network performance
and add new capabilities. Subscriptions are up, airtime use is up, and
consumers have found text messaging and mobile entertainment
applications to be quite popular. This Committee can take much of the
credit for this level of competition, because in 1993 and again in
1996, you decided that our industry should be a model for deregulation
and you prevented others from applying traditional rules and
regulations to our operations. Coupled with advances in technology, and
additional spectrum availability, your decisions have led to a
resounding competitive success story.
The industry's implementation of Local Number Portability or LNP
last year has facilitated the choices our customers now have. In
effect, LNP has become the ultimate form of wireless consumer
protection, because it has removed the major deterrent to changing
companies. If a consumer is unhappy, he or she can take their phone
number and their wallet and go elsewhere. If anybody needs proof of
that, look no further than the losses some carriers experienced after
Nov. 24 of last year, when LNP took effect.
Within the last year, LNP took an already competitive market and
made it hyper-competitive. Companies are under a brand new microscope
and must compete as never before. Differentiation has been magnified,
and pricing, network quality, handset selection, customer service, new
features like camera phones, and billing practices are central to a
customer's carrier selection decision.
With carriers now focused on differentiation--because that is the
best way to respond to customer demands--it would be counterproductive
to inject a governmentally mandated ``sameness.'' Instead we must trust
the market to do its job and encourage choice, differences and
innovation, and capital investment.
In all, I believe the wireless industry is a great American success
story--for consumers and the economy. In just two decades:
wireless consumer prices have dropped like a rock
choices in carriers, services have burgeoned
we've built a brand new industry, from scratch, into one of
the drivers of the American economy.
But against that backdrop, I think we're missing the boat on
creating a Wireless Telephone Directory. It's a subject that's
controversial not just with customers, but within the wireless
industry.
We at Verizon Wireless think a Wireless Telephone Directory would
be a terrible idea, and we will not publish our customers cell phone
numbers or otherwise participate in the plan you have heard about
today.
Here's why we will not participate in a directory assistance
program: Since we started this business, we have not published our
customers' wireless phone numbers. We did this consciously, for the
sake of preserving customers' privacy and control over their bill and
discouraging interruptions from unwanted calls. We do not believe those
basic reasons have changed.
In fact, we see more reason today than ever to protect customers'
privacy. The floodgates are open to spam, viruses, telemarketing and
other unwanted, unsolicited messages on landline phones, computers and
in mailboxes. We think our customers view their cell phones as one
place where they don't face these intrusions, where they have control
over their communications.
And if there's any doubt, our customers--and some of your
constituents--are reiterating loudly and clearly that they don't want
their wireless phone numbers published.
I have received countless letters on this subject from our
customers. Typically they all say, ``I find your stance to be grounded
in integrity . . . please keep my cell phone free of telemarketers and
unsolicited callers.'' I have not received one letter that urges me to
put the customer's number in a wireless directory. Clearly, there is
not a groundswell of customer demand for a directory that would justify
putting privacy in jeopardy.
To date, this industry has a strong record of proactive steps to
preserve customers' privacy in an intrusive world. For example:
The wireless industry fought to make auto-dial and
telemarketer solicitation calls to wireless phones illegal.
My company and other carriers have been aggressively
deploying and updating anti-spam filters.
Moreover, we have aggressively investigated, disabled and
prosecuted illegal spammers.
We recently determined a source of illegal SPAM to our customers
and obtained a permanent injunction against this Spammer.
Further, the Verizon Wireless' do-not-call, do-not-mail, do-not-e-
mail lists, and soon our do-not-SMS list, exceed requirements
established by the Federal Trade Commission's do-not-call registry.
Our industry has surrounded customers' information with a wall of
privacy. Why would we want to tear down that wall--that unique
advantage--that we have spent two decades fortifying?
The old business adage that the ``customer is always right'' is not
some old-fashioned way of doing business that has become at odds with
present-day business models.
Instead it is a basic tenet that remains rooted in sound business
sense. In the end, no matter what business you're in, pleasing
customers is more profitable than not pleasing them.
Verizon Wireless does not view the ``opt-in'' approach as a
solution. We are concerned that customers will see opt-in as a
disingenuous foot-in-the door-leading to ``opt-out'' clauses and fees
for not publishing a number. Further, ``opt-in'' is an all or nothing
proposition; it does not give customers any control over how and to
whom their information is revealed.
Our plan at Verizon Wireless is straightforward.
First, we do not, and will not publish or make available our
customers' wireless phone numbers for a paper directory or a directory
database.
Second, we will be changing our customer contracts to proactively
and clearly state: ``We do not provide our customers' phone numbers for
listing in directories.'' That change will eliminate any ambiguity
concerning our current practice of preserving customers' privacy and
our intentions for the future.
Earlier I observed that wireless has been a great American success
story--for consumers and the economy. It's a brief history, punctuated
by:
Consumer prices dropping like a rock
Choices going up
Building a new industry from scratch into one of the drivers
of the American economy
How fast and far the story continues in our third decade, depends
on:
The wireless industry remaining vigilant keepers of the privacy
flame while building more capacity and adding more varied and better
services to our wireless products; and
Regulators, especially at state and local level, allowing
the vibrantly strong competitive marketplace to work.
Thank you very much, Mr. Chairman. I look forward to the discussion
today and I will be happy to answer any questions.
Senator Allen. Thank you, Mr. Strigl for your testimony,
I'm sure there will be questions. Senator Ensign, did you want
to make an opening statement?
STATEMENT OF HON. JOHN ENSIGN,
U.S. SENATOR FROM NEVADA
Senator Ensign. I'll keep it very, very brief. Just to make
a couple of points here. I don't know that there's any place or
any industry in America that has stronger market forces at work
than in the cellular telephone industry. And I would say that,
I think there's pretty good evidence out there to back up that
statement. Having made that statement, I don't know why we
would want to put more government on more industry. It would
seem to me that if people are afraid that somebody's going to
force somebody into a directory, that you have somebody like
Verizon saying, ``We're not going to do that.'' And, if there
are people out there that say, ``I don't want to be part of
that, and I don't want to have anything to do with that,'' if
you were a company that was going to require or start charging
your customers for, say for instance, not being put on that
list, then those customers would have a tendency to migrate
toward a company like Verizon who is not. The market is going
to take care of this problem if we just let it. This is
legislation, we're legislating looking for a problem, instead
of just letting the market take care of it. I just think it's
kind of ridiculous that we are even thinking about putting
legislation forward on this particular issue. The idea of you
all doing what you want to do and letting the market forces
determine that and let the customers determine where their
dollars go would seem to make the most sense to me, so Mr.
Chairman, I will vigorously oppose this piece of legislation,
and I appreciate you chairing this hearing.
Senator Allen. Thank you, Senator Ensign. Senator Brownback
did not want to make an opening statement, but make a statement
for the record and, so ordered.
STATEMENT OF HON. SAM BROWNBACK,
U.S. SENATOR FROM KANSAS
Senator Brownback. Thank you for holding this hearing, it's
a great hearing to be held, and I hope we can really look at
this issue in some real depth, I've got an opening statement
that outlines the position, because I think it's going to be a
key one for us to wrestle with. Thank you.
[The prepared statement of Senator Brownback follows:]
Prepared Statement of Hon. Sam Brownback, U.S. Senator from Kansas
Thank you, Chairman McCain, for holding this hearing.
The Wireless companies' plan to offer a 411 Directory has been a
heated topic in the past few months as speculation over its possible
structure has appeared in news report and op-ed pieces throughout the
country.
Understandably, there is a residual fear among consumers resulting
from the ongoing battle against telemarketers in the landline world.
Many ask, would a wireless directory expose the millions of cell phone
users to an even worse type of unwanted commercial call--one that eats
up their minutes?
I would like to thank Senator Barbara Boxer for introducing her
legislation and with it raising the public debate over this pending
directory. I would also like to welcome Senator Specter for coming hear
this afternoon to share his concerns on the issue with this committee.
While I commend the good intentions of this bill's authors, as a
Co-Chairman of the Senate Wireless Caucus, I would like to caution this
committee. I think we should take a very careful approach to
legislating in this area.
I am pleased that the wireless industry has responded to every
criticism raised to date. They have committed to provide a 411-like
service that will be completely ``opt-in'' with no charge for those
customers who do not wish to be listed. This is different from the
wireline industry, where you have to pay to keep your name out of the
phone book. They have also established that the wireless directory will
not be published and that the names and numbers will not be sold to a
third parties.
Wireless companies have an excellent track record on privacy and
have every incentive to keep their commitments. As you know, wireless
is an extremely competitive marketplace. Moreover, the newly
implemented wireless number portability makes changing carriers these
days even easier. If a carrier were to break their promise and
compromise their customers, loss in business would be swift and
certain.
Our goal should be to ensure that we do not unintentionally make
the legal burden too onerous for the wireless companies so that we
create disincentives to establishing a 411 directory. As more and more
Americans ``cut the cord'' and rely exclusively on wireless, consumers
are demanding this service. It would be wrong for government to step in
hastily and unnecessarily, when there is not yet a problem to fix.
Of particular concern to me is Section 3(C) of the bill that
requires a very specific call forwarding protocol. There is concern
that this protocol is proprietary to a particular company. As written,
this might be picking winners and losers, which government should not
do. I urge a careful review of this section.
Thank you again Chairman McCain for holding this hearing. I look
forward to hearing from our distinguished Panel this afternoon. I offer
a special welcome to CTIA's new President, former Congressman Steve
Largent. It is good to see you back on the Hill.
Senator Allen. Thank you, Senator Brownback. Ms. Pierz,
thank you and all other witnesses for your forbearance. If you
would please proceed.
STATEMENT OF KATHLEEN A. PIERZ, MANAGING PARTNER, THE PIERZ
GROUP, LLC
Ms. Pierz. Thank you, Mr. Chairman, distinguished Members
of this Committee.
I was invited here today to present some key findings from
a consumer survey that the Pierz Group just completed. We
surveyed 1,500 of three cell phone providers regarding their
willingness to list their cell phone number, and their opinion
of various privacy protections that could be put in place.
The message that I have for the Committee today is simple.
Better communications and privacy are not mutually exclusive. I
believe that consumers should have both, and they want both.
Half of all the telephones in the United States today are now
mobile phones. Those are largely unlisted, and in spite of all
the technological innovation that we've seen in the
telecommunications area, directory assistance today remains
unchanged from the way it was in the 1950s, and there is really
very little that has happened in that time. The ways that we
have communicated with each other, and all the devices that we
have today, have changed dramatically. It may come as a
surprise to the Committee, and it would be rather a shock to a
lot of consumers to learn that there really is no specific
privacy protection for cell phone numbers today. In fact,
almost all mobile subscribers have already signed a contract,
as was mentioned, that gives the specific, express permission
to be included in a directory, and consumers are not aware of
this stipulation today. And with number portability in place,
you now also face the possibility that you could divulge
someone's lifetime telephone number without their consent,
unless we have specific privacy protections in place.
So, what do consumers want? We learned that a majority of
consumers want wireless directory assistance, however, nearly
all consumers want privacy protections in place to protect
their cell phone number. The stronger the privacy protections,
and specifically the protections that are mentioned in this
bill, the more likely consumers are to opt-in to a wireless
directory. We found that with these types of privacy
protections, as many as 62 percent of consumers will be willing
to list their number in directory assistance. Consumers rely on
their mobile phones.
Today, almost 10 percent, which means 16 million mobile
subscribers told us that they do not have a home phone anymore,
just a mobile phone. And if you look at adults who are 18 to
24, that number increases to almost 22 percent, they only have
a mobile phone today. We asked consumers why they would like to
have their numbers listed. Seventy-six percent said, ``I can
find people when I need them, or in an emergency.'' And we know
from past research that almost everyone can think immediately
of a situation where they needed to reach someone, or needed to
be reached on their mobile phone and couldn't do so. This is a
top of mind communications issue for consumers. When we asked
consumers what concerned them most about being listed, 28
percent said their overall privacy, and an additional 28
percent said that they were concerned about calls that they
didn't want, or calls from people that they didn't know.
In the survey we tested some specific options for privacy
protections. Under the proposed CTIA plan, consumers will list,
however with specific additional privacy protections where the
number is never given out, or printed on a phone bill, and
where consumers can actually know who's calling them, so they
can take that call, or not, based on their choice. You can get
over 60 percent of people to list in a data base. This is an
important number, because 60 percent represents critical mass
in the database in terms of being a value to consumers, and to
carriers. Consumers clearly want privacy protection. Especially
because they believe that they have that protection today. I
would argue that most wireless carriers would like to be able
to give consumers more privacy protection, so what's stopping
us? Why can't we get to that point? In a perfect world it would
be easy, but much like the issue of local number portability,
no one carrier can do this alone because a call is completed
over different networks. There is no particular market
incentive in place to protect a consumer's privacy, and that's
where we've seen a breakdown in market forces. Wireless
carriers, even as a group, as an industry, can't force other
carriers to mask numbers or protect consumer privacy. And,
there is no particular market incentive for them to do that.
So, if wireless directory assistance can be done right,
everyone wins. Consumers, small businesses, fixed line
carriers, and wireless carriers. We can do better than just
listed and not listed. It's not rocket science from a
technology perspective, but it is complicated from an industry
cooperation point of view. If the Committee can achieve this,
and protect mobile numbers and allow consumers to control their
own privacy, will ensure the greatest value is derived from
this process for everyone. And it will be a pro-privacy and a
pro-competitive move. Thank you.
[The prepared statement of Ms. Pierz follows:]
Prepared Statement of Kathleen A. Pierz, Managing Partner,
The Pierz Group, LLC
Chairman McCain, Ranking Member Hollings, and other distinguished
members of this Committee, thank you for inviting me to address you
this afternoon. I would like to request that my full written testimony
be submitted for the record.
My name is Kathleen Pierz. I am the Managing Partner of The Pierz
Group, an independent consulting firm serving the Information Services
industry with a special focus on the very narrow niche of directory
assistance. Our clients are fixed line and wireless carriers, directory
assistance (DA) providers and technology companies around the world. I
have been involved in this industry for 17 years, having worked in
information services at Ameritech (now SBC) and IBM. I now consult to
the industry and have authored more than one hundred reports and
articles on the subject of directory assistance and databases.
Half of all telephones in the U.S. are now mobile phones. The issue
of adding cell phone numbers to directory assistance is an important
one for consumers and for businesses. The message I have is simple:
Better communications and privacy are not mutually exclusive; consumers
can have both.
What the Committee is addressing today is the fact that there are
no guarantees, no legal construct that give consumers the privacy
protections they want (and think they have today). I was invited here
today to present key findings from a recent independent national
consumer survey of 1,503 cell phone subscribers conducted by The Pierz
Group in July and August of this year. The purpose of this independent
research was to establish consumers' willingness to list their wireless
phone numbers in directory assistance and under what specific
conditions. In addition, I have published three other major reports in
the past 18 months about the opportunity to add mobile numbers to the
DA database in countries where they are not included today.
As an analyst, I write regularly about the fact that U.S.
information services, whether from 411, print phone books or online
services have lagged well behind our communications infrastructure. DA
in the U.S. today has changed little since the 1950s, but the ways in
which we communicate have changed dramatically. DA databases contain a
single fixed-line phone number and a billing address. Mobile phones as
well as many other methods of communication now play a major role in
our daily lives, yet there is no way today to reach a mobile subscriber
without knowing the number, through DA or any type of directory. In
addition, e-mail addresses, Instant Message (IM) addresses, SMS codes,
fax numbers, pagers, website URLs etc, like mobile numbers, are all
unavailable unless the owner gives them to you, and you have them when
you need them.
Nearly 53 percent of all phones in the U.S. are now unlisted. That
figure includes the roughly 20 percent of all fixed-line numbers that
are unlisted (roughly 33 percent of residential numbers are unlisted)
and the 97 percent of wireless numbers. (Some cell phone numbers are
listed because incumbent wireline carriers permit them to appear in
their white pages--for a special fee.) By contrast, in Scandinavian
countries between 85 percent and 95 percent of all phone numbers
(wireline plus wireless) are listed. In these countries, between 20
percent and 25 percent of DA calls request a mobile number. In the
U.S., mobile phone numbers are not available through DA; in fact,
wireless numbers are not even available to emergency workers in life-
and-death situations.
Mobile numbers are not private
It may come as a surprise to the Committee--and to many consumers,
I'm sure--that today there is no specific privacy protection in place
for mobile numbers.
The only reason your cell phone number is not publicly available
today is because that has been the industry practice for the past 20
years. One must also consider the fact that nearly all mobile
subscribers, with the exception of Cingular Wireless customers, have
already signed a contract that includes their express permission to
have their mobile number listed in any type of directory the carrier
may choose. Consumers are not aware of this stipulation in their
contracts.
LNP: An additional factor
The need for consumer privacy protections becomes more significant
in the wake of the new Local Number Portability plan. LNP means that
cell phone users can keep their numbers when they change carriers--
indeed, one number for the rest of their lives. Think of the
difficulties consumers would face if these ``lifetime number'' were
divulged without their consent. So, LNP makes it more important to
protect consumers' expectations of the privacy of their cell phone
numbers.
To translate these broad concepts into actual consumer experience,
we surveyed more than 1,500 consumers in July and August. We asked them
detailed questions about their privacy expectations on cellphones and
what they want, and don't want, from a cellphone listing in directory
assistance. I would like to summarize those findings for the Committee.
What consumers told us:
Many consumers want to be able to contact each other on their
mobile phones. Nearly all consumers want to have some privacy
protection built into that contact process. Because mobile phones are
considered to be more personal, they are more likely to be answered any
time or anywhere. For these reasons--and because they have been
unlisted in the past--consumers expect a higher level of privacy for
their cell phone number.
With privacy protections, a majority of consumers will list
their cell phone numbers. The stronger these privacy
protections, the more willing consumers are to list:
Eleven percent of consumers (about 18 million wireless
subscribers) will list their cell phone numbers without any
type of privacy protection at all. This number is up 500
percent over the number of consumers who said they would
list (2 percent) under these circumstances in July of 2003.
Fifty-two percent of mobile subscribers (about 84
million wireless subscribers) will list their numbers if at
least some type of privacy protection is provided.
With the most comprehensive privacy protections, up to
62 percent of consumers (over 100 million wireless
subscribers) would be willing to list the cell phone
numbers. Given the fact that roughly 67 percent of
residential numbers are listed today, this is a very high
number.
Creating a process to easily add cell phone numbers to
the National Do Not Call Registry in conjunction with
privacy protections would make 47 percent of consumers more
willing to list their cell phone numbers. This, of course,
is easily accomplished.
Our research shows that consumers could expect an
average of three to five additional calls per year to their
cell phones as a result of having their wireless number
listed. This is of course an average. Many will get no
calls from DA, some will get more.
If consumers had to pay for the incoming calls (and
some carriers may not require that), an additional three to
five calls per year would have little cost impact to
consumers. These new calls would generate an additional
average expense of $0.45 per month, or 1/100th of a typical
monthly wireless phone bill.
Consumers are not aware of the provisions in their
current wireless contracts that gives express permission to
list their numbers in a directory.
Caller ID functions do not necessarily identify a
calling party. If a phone number is unrecognized by a
consumer, there is no way to know who is calling. In
addition, a significant percentage of calls to mobile
phones today are shown as ``incoming call'' with no number
or name available.
Why do consumers want to have cell phone numbers available
through DA?
These answers were very concentrated and consistent.
Seventy-six percent said, ``I can find people when I need
them or in an emergency.''
Other popular answers were, ``people can find me'' and
``it would help me do my job.''
9.6 percent of all mobile subscribers (almost 16
million people) report having no home phone; only a mobile
phone
More than twice as many (21.8 percent) people between
18 and 24 years old have only a mobile phone.
What worries consumers about listing their cell phone
numbers?
Twenty-eight percent said, ``overall privacy.''
Twenty-eight percent said, ``calls from people I don't
want to talk to.''
Twenty-five percent want to avoid telemarketing (which
is already prohibited, although consumers are not aware of
this). It should be noted that in a 2002 study conducted by
privacy expert Dr. Allan Westin, 88 percent of consumers
said the number one reason not to list their mobile number
was fear of telemarketing calls. It is clear that consumers
believe that the Do Not Call Registry works and could
protect their mobile numbers as well.
What privacy protections do consumers want?
Our consumer research project tested five different privacy
options, all of which could in theory be implemented today--I say in
theory because some would require that all telephone services
providers, both fixed and wireless, adopt appropriate technologies and
standards and privacy protections to achieve this end. This would
obviously generate costs for carriers, but more importantly it means
that all carriers would need to agree to and implement these privacy
protections. It is these difficult coordination problems that have
stymied parties on all sides.
The CTIA Plan
The CTIA, which is working to assemble a national wireless
database, holds some sway with its membership and can ask them to
cooperate--but ``ask'' is the operative word here. The CTIA cannot
obligate anyone--especially fixed line carriers. The CTIA plan includes
what might be called a least common denominator for privacy protection;
it covers those aspects the organization can ensure within the process.
Under the CTIA plan, wireless numbers will be put into a DA database.
This national database won't be sold to anyone, won't be published in a
print directory and will not appear on the Internet. Some consumers
will list under this plan. Our research shows that 26 percent would
list right away and an additional 27 percent would list once they had
an opportunity to see this plan in place and be convinced that it
works. This provides for 53 percent of consumers to eventually list
their wireless numbers. That is certainly a good start but is still
somewhat short of critical mass (0ver 60 percent listed) in order to
create a robust and effective service.
As explained below, two of the five privacy protection plans
(``Preannouncement'' and ``Listed for Messages Only'') did test better
with consumers than the CTIA plan. Both involve more aggressive privacy
plans and actually allow consumers to control, to a caller, who can
reach them. Our research shows that these additional privacy
protections increase the number of subscribers who would list their
mobile numbers right away by 61 percent.
Preannouncement
This option refers to the practice of the call recipient hearing
some sort of announcement that a call is coming in from a wireless DA
user. Callers wishing to reach a mobile subscriber would record their
names at the prompt and would be connected to the mobile subscriber.
The cellular customer would hear the name and could say ``accept,''
``reject'' or ``voice mail'' to manage a call from directory
assistance. This option tested well because under this plan the phone
number would not be given out and subscribers would have control over
who could reach them on the mobile phone. Under this plan, 36 percent
would list immediately and an additional 23 percent would list later.
This option would allow almost 60 percent of cellular subscribers to
list their numbers with confidence.
Listed/Not Listed/Listed for Messages Only
A listed/not listed/listed for messages only option also tested
very well. This scenario gives wireless subscribers a third option. If
they were listed for messages only, they would not get any calls from
directory assistance, but would have a message sent to them with the
name and number of the person trying to reach them. They could then
return the call or not, as they chose. Like the preannouncement option,
this privacy protection option gives consumers control over who can
reach them. Thirty-eight percent would list now, with an additional 24
percent would be willing to list later, allowing 62 percent to
eventually list their numbers. This is consistent with the roughly 67
percent of listed residential numbers today.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Source: The Pierz Group, 2004
Consumers want to use DA to get mobile numbers and are, in large
part, willing to list their wireless numbers--but only if they can
control who can reach them. In the simplest terms, consumers want to
receive the calls they want, and don't want to receive calls they don't
want. They want and expect to be able to maintain some level of
privacy. The wireless industry and fixed line DA providers stand to
earn a projected $2 to $3 billion a year in additional revenues from
incremental DA calls and additional minutes of wireless usage. Putting
mobile numbers in the DA database is good for consumers and good for
the industry, but only if done right. ``Right'' is what consumers say
it is, the vast majority do not want their number given out (they want
calls forwarded directly) and they want to maintain some control over
who can reach them.
If everyone wins, what are the key obstacles?
Consumers do not have key information:
Wireless subscribers do not know they have signed a
contract allowing their number to be put in a directory.
There is no additional, specific legislation or
regulation that dictates how mobile numbers can be used or
listed.
Consumers do not know what types of privacy
protections are planned or could be put in place.
Wireless subscribers do not know that they are already
protected from unwanted commercial contact (telemarketing)
on their cell phones (see FCC Report & Order 47 CFR,
section 64.1200, Subpart L).
Consumers use their mobile phones in different ways and have
different expectations. Many will list, some will not. For some
consumers the mobile phone is a safety device kept in the glove
box; for others it is a vital communications tool and the only
phone they have.
It is extremely difficult for fierce competitors,
particularly across wireless and fixed line industries, to
agree to a plan to protect privacy of cell phone numbers
without some requirement to do so. They have different
incentives, business strategies and models, and they have
different systems and technologies in place to manage their
businesses.
Carriers have a broad array of different and in many cases
aging billing systems--these would have to be modified to avoid
divulging mobile numbers and to provide accurate Caller ID
information. This would require some additional investment and,
again, a need for carriers to meet specific privacy
requirements.
If numbers are masked but not in a manner (such as with
credit cards, e.g., 202-123-XXXX) that gives consumers
sufficient information, carriers are concerned that service
costs could climb when consumers call to contest DA charges for
numbers they can't see.
Why should Congress care about wireless DA?
Based on my research with consumers and my observation of the DA
sector and the telecommunications industry more generally, I see two
principle reasons why Congress should care about wireless DA:
1. Protecting consumers' privacy expectations
As my research plainly shows, consumers value the privacy of their
cell phone numbers. Consumers think that they have protections today
against unauthorized release of their cell phone numbers. Many
consumers would be shocked to learn that there is no law or rule
protecting release of their cell phone numbers. Most consumers--not all
of course--are interested in getting calls through directory assistance
if they can retain control over who can reach them on their wireless
phones. Thus, the bill before the Committee protects twenty years of
consumers' expectations.
2. Improving the value of the network for everyone
This Committee is certainly familiar with the economic principle
that additional users of the telephone network create benefits for
everyone--the marginal user as well as everyone already on the network.
Indeed, this powerful theory underlies our universal service policies
and has served our country very well. That same analysis, however,
applies with equal force to wireless. Consumers using wireless
telephone service create networks in which subscribers benefit from
additional persons being accessible on the network. Policies that
expand use of the network and the accessibility of additional persons
yield positive and direct network effects for all consumers in the
market, and in fact for carriers.
As noted above, however, the wireless area is more complex because
one has to factor in the privacy issue--not everyone wants to be
reached and most consumers do not want to have their cell phone numbers
divulged. And that is where we see an issue. It is not at all clear
that all the carriers involved in a wireless call (fixed phone to a
mobile phone, or mobile phone to mobile phone) have the incentive to
protect the privacy of the telephone number if a subscriber wants to
keep it private. Consumers should have a choice that goes beyond simply
having their cell phone numbers listed (everywhere) or not listed.
Every consumer with an unlisted home number readily admits to missing
calls they really want to receive, but they are willing to live with
that problem to avoid calls they don't want to receive. Likewise,
consumers can readily identify situations where they needed to reach
someone or to be reached themselves on a mobile phone and it was not
possible. There are of course people who do not want their mobile
numbers in a DA database, even if the number was not divulged to
callers. They should absolutely be able to rely on this protection, and
know that their numbers can remain unlisted.
We can do better; this is not rocket science from a technological
point of view, but it is complicated from an industry implementation
point of view. We have seen this complication in the huge efforts by
the CTIA to establish a wireless database that provides some level of
privacy for consumers. Even so, the largest wireless carrier in the
country is no longer willing to participate in this process based on
what it sees as inadequate privacy protections. I do take issue with
the comments of Verizon Wireless' president in the press that adding
mobile numbers to DA is a ``dumb idea.'' Done right, with the privacy
protections and the choice consumers expect, it is a good idea and
benefits consumers, carriers and many small businesses.
Ultimately, whether or not legislation is required to ensure
consumer privacy becomes a question of political philosophy. Adding
regulation to a successful and highly competitive industry is a
difficult choice. It is one, however, that will promote privacy
interests by ensuring that consumers have control over their cell phone
number and that this privacy decision is respected by all carriers,
whether wireless or fixed line. At the heart of this decision is the
fact that this issue crosses two completely separate industries, fixed
line carriers and wireless carriers, who to some degree compete with
each other. The wireless industry could collectively agree to mask
mobile numbers and not disclose them. However, if even one fixed line
carrier does not provide this same number-masking capability and prints
mobile numbers on its billing statements, the numbers are not masked
and not private. Similarly, one carrier could offer the more aggressive
privacy options: listed for messages or preannouncement privacy
protection, but that will not work unless all providers in the fixed
and wireless industry agreed to provide the same privacy protection
option(s). We have two industries and hundreds of carriers (fixed and
wireless) that must coordinate privacy protection policy to achieve
this end for the benefit of consumers. To date, these efforts have
fallen short of what consumers expect.
If the Committee can accomplish those two objectives--protecting
privacy and ensuring that the greatest value is derived from this
process for everyone (consumers and carriers)--then it will accomplish
much.
Senator Allen. Thank you, Ms. Pierz, I'm sure there will be
more questions for you as well. Thank you for your testimony,
we'd now like to hear from Mr. Cox.
STATEMENT OF PATRICK A. COX, CEO, Qsent, INC.
Mr. Cox. Thank you, Mr. Chairman and Members of the
Committee, I appreciate you having me here to testify today. I
want to talk through how the proposed wireless 411 service
would work, talk about the privacy protections in place for it,
and maybe speak to the value of a directory, as well.
Qsent's commitment to privacy and consumerchoice has landed
it in the position where six carriers, which is Alltel,
Cingular, AT&T Wireless, Nextel, Sprint and T-Mobile are
planning on launching a wireless 411 initiative with a company
aggregating that content and putting it out into the
marketplace. More specifically, to create one single service,
where these numbers will be available through traditional
existing 411 service infrastructure today. The way the service
is going to be designed is to ensure that consumers have a
choice, and that their privacy is protected. It will not be
available in a printed directory, it won't be electronically
distributed, it won't be on the Internet. This is actually what
we call, dynamically protected privacy data base, which means
that every time a call comes in for an operator services
company, then and only then will the phone number be displayed,
and it won't be stored, it won't be kept by the operator
stationed, it will just be permission for the single call. If
an individual chooses not to be included, their listing will
not be made available in any form on this service. The current
media misperception is that every subscriber would be included
in the 411 data base, this is not a realistic option, and in
fact is not what would be happening. For example, if we did
that, there would be judges, law enforcement personnel,
celebrities, children included in this data base, and that
would create a trust problem, it creates a privacy problem, a
lot of business risk for carriers to do that, that is not the
plan, this truly is going to be an opt-in. The data base, day
one, starts at zero. A carrier's greatest asset is its
customer. And so, I think there's no better way to take care of
that customer and create trust than giving them choice. On how
they control and how they display their personally identifiable
information. So Qsent and its participating carriers believe in
the following principles, and we think this also creates a very
successful service: the right to choose, the right to change
that choice, the right to security, and the right to have all
of that without cost. That's the agreement amongst all the
participating carriers in this opportunity here.There's a clear
need for this for the consumer. The value of a directory.
Eighty percent, which is a supermajority of consumers today,
eighty percent choose to have their land line numbers included
in voice-based 411 services. Hundred of thousands of consumers
now currently pay their wireless carrier companies money to be
listed in directory assistance, and to be listed in the phone
book. There are varying value propositions, but in essence,
personal reasons, business reasons, sometimes people want to
stay in touch with their prospects, their customers, their
family and their friends, and they want to choose to be part of
this. For over eighty years, Federal and state governments have
affirmed the belief that telephone directories are in the
public interest. In fact, printed Yellow Pages generate
billions of dollars in revenue from businesses which result in
lower phone costs for consumers. According to the FCC, 50
percent of all telephone subscriptions this year are for mobile
service. Even a growth in dependency of the wireless phone, the
availability of a wireless 411 service will for the first time
create parity between the wireless and land line service
offering, creating more competition and creating better
consumer benefit and lower prices.For business people,
particularly small business owners, the benefit is clear. A
specific problem we have with the bill and it sounds like it's
being addressed by some of the comments earlier by Mrs. Boxer
and Senators Wyden and Smith, but there's a section C, the call
forwarding, this method won't work, legally or technically.
There are a lot of regulatory issues around it, a lot of
technical issues around it. There's no existing method today
that will positively authenticate a caller's identity. Caller
ID on the network doesn't exist, except for just telephone
number, you don't get name transmitted. We don't support it,
and not only that, there are certain state and PUC regulations
that require printed disclosure of both parties' number on
phone bills. So, in conclusion, the legislation before us today
will stifle innovation, and investment, and limit consumer
choices while not adding any additional privacy protection. We
believe that the customer is always right. And I believe you
should give the customer a chance to allow them to choose
what's best for them. The greatest right a consumer can have is
personal choice and control. The wireless 411 service will
provide this. Thank you.
[The prepared statement of Mr. Cox follows:]
Prepared Statement of Patrick M. Cox, CEO, Qsent, Inc.
Good afternoon, Mr. Chairman and Members of the Committee. Thank
you for inviting me to testify on Senate Bill S. 1963, the ``Wireless
411 Privacy Act''. My name is Patrick Cox and I am CEO of Qsent, Inc.
Prior to founding Qsent, I was the founding CEO of MetroOne
Telecommunications, Inc., the first independent operator services
company to provide 411 services to wireless phone users.
I am here today because Qsent was selected by six of the Nation's
leading wireless carriers to facilitate the delivery of wireless
directory assistance information through the existing 411 providers,
the Operator Services Companies (OSCs). Simply stated, Qsent was
selected because these large, diverse, fiercely competitive companies
trust us with one of their most important assets: customer listing
information. In our current business, we've demonstrated our commitment
to consumer choice and privacy as well as our ability in managing
highly secure services. My company's background and expertise makes us
uniquely qualified to work with the wireless carriers and their
associated OSCs in making the Wireless 411 Service a success from the
consumer's perspective.
Mr. Chairman, you and the other members of this Committee have been
leaders in adapting our laws to meet the changing needs of the
information age. You recognize the importance of creating an
environment where new technologies can be adapted to provide consumers
with more and better services without compromising their rights and
privacy. I am concerned that by adopting this legislation, you may
stall technology growth and limit new consumer and business services
that provide real value. I applaud your commitment to privacy, and at
the same time I believe this legislation, and the bill before Governor
Schwarzenegger in California, are based on fundamental misconceptions
about the Wireless 411 Service. The legislation outlines ``fixes'' to
problems that do not and will not exist, and in doing so, will restrict
consumer choice in unintended ways.
The Wireless 411 Service
The Wireless 411 Service is designed to be the consumer-choice and
privacy-protected inclusion of wireless listings in the national 411
infrastructure, making wireless numbers available in the existing 411
service. In fact, it will not be a directory like standard 411, but
based upon a dynamic privacy-protected database accessible only in
real-time for each 411 inquiry by the operator. The service is not yet
available, but the following describes the fundamental design
principles.
Subscribers will be able to pre-authorize (opt-in) through their
carrier, the availability of their wireless phone number information
for 411 purposes. It is expected that individuals will be able to
choose to participate in the Wireless 411 Service at any time.
If the individual chooses to opt into the Wireless 411 Service,
their carrier will make their listing information available for the
privacy-protected database. When a wireless number inquiry is made, the
data aggregator (Qsent) will provide the carrier's Operator Services
Company (OSC) access to the data. The OSC will neither temporarily
store nor permanently retain the subscriber information.
If an individual chooses not to opt into the Wireless 411 Service,
their listing will not be made available in the privacy-protected
database. If no decision is made by the consumer to opt-in, the
individual is automatically opted out. It is critically important to
the success of this service that it begins with no participants and
grows only as individuals explicitly opt-in. There is far too much
business risk to the carriers and privacy risk to individuals for it to
work any other way.
Individual carriers will be responsible for outlining services and
options to subscribers, managing the opt-in process and providing Qsent
with the approved wireless phone number information. With their
greatest asset on the line--customer trust--there are huge incentives
to follow this course.
Qsent will collect opt-in wireless listing data from participating
carrier data sources and provide the information through each carrier's
selected OSCs--the same OSCs that provide landline 411 today. The
information will be placed into Qsent's dynamic privacy-protected
database and will only be accessible by an OSC in response to a real-
time customer query for an opted-in wireless number.
Qsent will not create or allow to be created a wireless phone
number directory, either printed, electronic or online, in whole or in
part. Measures are in place, such as employee training and technical
controls to ensure that no printed, electronic, or online directory is
created.
Privacy
Protecting Privacy is a fundamental requirement for Qsent's
business and for the Wireless 411 Service. We not only focus on privacy
because it is the right thing to do, but also because it is good
business practice. Wireless carriers have a crucial valuable asset, the
trusted relationships they build with their customers. The Wireless 411
Service will strongly support this relationship. In services such as
Wireless 411, consumer participation is an important factor for
success. Building trust through strong privacy principles substantially
increases the likelihood that individuals will participate. We
understand how privacy is personal to each of us, to our family, to
your constituents, and to our customers. We've designed all Qsent
services, including the Wireless 411 Service, with a foundation of
privacy protection. The Wireless 411 Service provides the wireless
carriers with the ability to assure consumer trust. Qsent believes the
following principles are critical to a successful Wireless 411 Service
and are designed into the foundation of the solution.
The right to choose.
A Wireless 411 Service privacy policy will be made
available to customers in plain-English--not legalese.
Customers must opt-in to have their phone number
included in the service.
The right to change your mind.
Customers may choose to have their number removed from
the service at any time. When they do this, no residual
uniquely identifiable information will remain (as a result
of having been part of the service) anywhere within or
outside of the service.
The right to security.
Customer data residing in the Wireless 411 Service
privacy-protected database will be disclosed only for the
purpose of providing voice-accessed 411 services, and will
not be disclosed in either printed or electronic form.
A method will be provided for customers to have their
numbers removed from the service or to register complaints
about the service.
Opt-in requires authorization of an account owner who
is 18 years of age or older.
The right to exercise these fundamental choices at no
charge.
Qsent does not charge carriers for storage of
listings, additions, or deletions. Additionally, we
understand that each participating carrier will not charge
for such services.
These four fundamental principles are built into all Qsent
practices, into the Wireless 411 Service and into the provision of
Wireless 411 Services at the OSCs. Qsent will make consumers' listing
information available only as part of a real-time, individual query
initiated by the delivery of 411 service. There will never be a bulk
distribution of uniquely identifiable information. The OSCs will not
store or retain the data. These efforts enable individuals and
enterprises to control how personally identifiable information is
disclosed to third parties in a clear and simple way.
Consumer Benefits
Today, about 80 percent of consumers choose to have their landline
phone numbers listed in a directory, and there are many who now
voluntarily list their cell phones as well. Clearly, there is a strong
value to them in doing so, whether that value is business or personal.
Further, in an increasingly electronic economy, directories are what
enable networks like the Internet and e-mail to operate efficiently,
and for consumers and businesses to gain the most value from them. Most
importantly, directories play a key role in helping people stay
connected. The Wireless 411 Service is an example of how traditional
directories will evolve to deliver these same benefits in a way that
protects privacy and preserves consumer choice.
According to the FCC, of the 165 million cell phone users in the
U.S. today, 20 percent consider their wireless phone to be their
primary communications device, with 5 million reporting that their
mobile phone was their only phone. And even more astounding, half of
all telephone subscriptions in the U.S. this year will be mobile
phones.\1\ Given the growth and dependency on wireless devices, a
Wireless 411 Service will meet the growing demands of those subscribers
who want such a service and specifically choose to participate.
---------------------------------------------------------------------------
\1\ The Pierz Group, ``Adding Mobile Numbers to the U.S. Directory
Assistance/Enquiry Database,'' Kathleen A. Pierz, July 30, 2004, pp. 13
-14.
---------------------------------------------------------------------------
For business people, particularly small business owners who are
mobile such as real estate professionals, contractors and consultants,
the benefit is clear. For personal safety, consumers may also choose to
participate in order to be contacted in an emergency situation wherever
or whenever it occurs. This could be a teenager searching for a
parent's forgotten cell number after a roadside accident or a frantic
parent in a emergency trying to contact a child who is with a friend's
family.
Finally, for the large and growing number of individuals,
particularly young people for whom their cell phone is their only
phone, participating in the Wireless 411 Service will be their means
for people to find them--their means to be both mobile and available,
if they so choose.
So why don't more wireless subscribers choose to be listed in
traditional 411? The answer; it's difficult, costs money and opens them
up to unwanted calls because it isn't privacy protected. In fact, a
telemarketer who gets a directory today has no way of knowing which
listings are cell phones if they want to specifically avoid calling
them. With the Wireless 411 Service, the consumer benefits are realized
while the negative consequences have been designed out.
Legislation
Let me share with you my thoughts on the proposed legislation
specific to what I expect to be the practical affect on consumers and
businesses.
The Wireless 411 Service is a natural evolution of an increasingly
pervasive technology. The idea of adding the capability for a cell
phone user to call 411 for service assistance in reaching another
subscriber who has chosen to be listed seems a natural course in the
innovation of wireless technology. The design of the Wireless 411
Service was developed with consideration for the existing consumer
privacy laws already in place.
Today, there are a number of consumer privacy laws designed for
landline phones that cross-over to protect wireless consumers. These
include: the National Do Not Call Registry, CAN SPAN Act of 2003 and
the Telephone Consumer Protection Act of 1991 (TCPA). As of June 2004,
62 million numbers were on the Do Not Call list. This has proven to be
an effective means to screen out telemarketing calls. The TCPA
prohibits all autodialed calls to wireless phones, whether it is a
marketing call or not. The CAN SPAM Act and the rules recently
promulgated by the FCC prohibit unsolicited commercial messages to
wireless phones and pagers, providing yet another layer of protection
for the consumer. The Wireless 411 Service is compatible with, and in
fact can help with the compliance of these laws.
Section (C) CALL FORWARDING of the Wireless 411 Privacy Act appears
to be an attempt to ensure that callers only receive desired calls, but
the method mandated in this legislation will not allow that to occur.
First, accepting or rejecting the notification of an unwanted call is
no less invasive than receiving the call but not taking it. Second,
there is no method or technology available to effectively authenticate
the identity of the caller; therefore, it would be relatively easy for
someone to claim a false identity in order to get through. The
inability to authenticate the true identity of a caller to a cell phone
stems from the fact that there is no technology that displays the
Caller ID name for an incoming call to a cell phone. The name can only
be displayed if the name already exists in the personal address book in
the cell phone. Therefore, there is no way to notify the user of the
caller's identity before the call goes through. Third, certain state
PUC regulations may require detailed call billing. If the goal of call
forwarding is to obscure the number, that couldn't be accomplished
because the wireless number would appear on the call detail reports.
Eventually, many technology companies will develop competing
products that will allow you to only receive calls from certain people
or allow the true integration of caller ID for cell phones. Consumers
have the right to choose these service offerings. Consumer choice
should not be constrained by Congressional legislation.
The Wireless 411 Service will have a dynamic privacy protected
database from which no printed or electronic directory will be created.
However, the pending legislation calls for the prohibition against any
future published directory. I do not believe this service should be
strictly prohibited through legislation simply because subscribers
themselves may find that they want to put their wireless phone number
in the white or yellow pages, as millions of businesses do today.
Conclusion
We've designed the Wireless 411 Service to ensure that consumers
know their information will be secure and private. Most importantly,
the greatest protection a consumer can have is personal choice. The
Wireless 411 Service will provide this. The legislation before us today
will stifle innovation and limit consumer choice while not adding any
real privacy protection.
Thank you.
Senator Allen. Thank you, Mr. Cox, we'd now like to hear
from Congressman Largent.
STATEMENT OF HON. STEVE LARGENT,
PRESIDENT AND CEO, CELLULAR TELECOMMUNICATIONS AND INTERNET
ASSOCIATION
Mr. Largent. I ask that my entire statement be submitted
for the record.
Senator Allen. It is so ordered.
Mr. Largent. Thank you. Let me begin first of all with the
building question in my chest, and that is, why does a
competitive, vibrant industry have to come before Congress to
ask permission to offer a new service to its own customers? Is
there a presumption in Washington that the government cares
more about wireless customers than wireless carriers do? I
would say the answer to that question, the second question, is
no. Mr. Chairman, this is my first opportunity to testify
before the Senate as the spokesperson for the wireless
industry, and I can tell you that the world looks a little
different on this side of desk, and I'm happy to be where I am,
and I'm happy that you're where you're at.
I want to offer, if I can, just a few brief comments about
the wireless directory assistance, but I want to begin by
talking about the industry that I'm very proud to be associated
with. The wireless industry has a tremendous story to tell, and
I'm going to try to tell it in just a few brief minutes. Let's
look at the picture of the wireless industry, just in the last
10 years, from 1993 to 2003. In 1993, the year that Congress
passed some important legislation creating the competitive
market that we know today, there were 16 million subscribers in
the U.S. Ten years later, there are 168 million subscribers in
the United States. In 1993, we had 13,000 cell towers in this
country, today we have 163,000 cell towers providing better
quality of service than ever before. Since the advent of the
industry, this industry has invested $148 billion in creating
the infrastructure that we know today, $20 billion in 2003
alone. Eight hundred and thirty billion minutes of use in air
time over the wireless framework just last year, 830 billion
minutes of use, and at the same time, as Senator Allen
correctly said, from 1993 to 2003, better quality of service,
more minutes of use, more services offered, the cost of
wireless service has declined from $60 per month to under $50
per month in 2003. Why? Because of the competition. Competition
was vibrant and robust. Eighty-seven percent of all Americans
have a least five, sometimes more, providers to choose from
when they choose their wireless service provider. Ninety-seven
percent of all Americans have at least three choices when it
comes to their wireless carrier. Competition continues to
produce new, and better, and more innovative services. Text
messaging, photo and video messaging, broadband Internet
access, consumer short codes, free long distance, and now, 411
service, a new service that we are trying to provide to
customers that we know desire it. Now, 168 million customers in
the United States do not want to have their number listed, we
know that. We think, we estimate the number to be more around
5-8 percent, but still, that represents over 10 million people
in this country that would actually like to have their number
listed, and we're responding to our customers because we are
very customer-sensitive, and customer-centric. It is a very
highly competitive industry. I'd like to make four really
important points. CTIA has been tasked by six of the seven
largest carriers in the country to act as a coordinator in the
development of the 411 service, and I'd like to make these very
briefly, these four points.
First of all, the 411 service would be a totally opt-in
service. It goes beyond the legislation that's being
considered.
Second, you won't be charged to opt-in and you won't be
charged to opt-out.
Third, the data that would be held would be held by a
secure third party in the form of Qsent and Pat Cox to my
right, but it cannot be sold and it cannot be accessed by any
other entity, for any other purpose. Finally, this is a service
that has not even been introduced. There has been no harm, and
no foul, and it was in my opinion wholly premature and very
proscriptive for Congress to even be considering this
legislation.
In closing, there are, however, matters that Congress
should be thinking about before the session comes to a close
that would greatly benefit wireless customers.
Number one, send the Internet tax moratorium bill to the
President for his signature, ASAP. Very important, as we
consider the third generation broadband access over wireless
devices. And second, the bill to provide needed spectrum for 3G
advanced wireless services. These are things that are very
important, and should be high on the priority list of this
Congress before they leave for this election year. At this
point, Mr. Chairman, I would conclude my remarks, thank you for
the opportunity to testify, and I look forward to your
questions.
[The prepared statement of Mr. Largent follows:]
Prepared Statement of Hon. Steve Largent, President and CEO,
Cellular Telecommunications and Internet Association
Chairman McCain, Ranking Member Hollings and members of the
Committee, thank you for your invitation to testify this afternoon on
S. 1963, the ``Wireless 411 Privacy Act'' introduced by Senators
Specter and Boxer. This is my first opportunity to represent the
wireless industry before a congressional committee since becoming
CTIA's President and CEO last November, and I must admit the view is a
little different on this side of the dais, but I do welcome the chance
to provide CTIA's views on this legislation and the issue of the
development of a wireless 411 service.
Let me preface my remarks by acknowledging that I have little doubt
that the authors of S.1963 are well intentioned in their efforts with
this piece of legislation; however, I sincerely believe that this bill
is a solution in search of a problem and that S. 1963 is unnecessary.
The wireless industry has a proven track record of protecting our
customers' privacy, and we have made a concerted effort while
developing this directory assistance service to safeguard our
subscribers' personal information. Moreover, the service is still in
the planning stages. It is extremely premature for Congress to issue a
government mandate on a service that has yet to be made available to
our customers. If there are wireless customers who have serious
reservations about this service or who just do not want to be bothered
with the choice of opting-in, they have the option to switch to a
carrier that is not participating in the wireless 411 service.
The wireless industry has a great story to tell and I feel
fortunate to be here today to tell it. Currently, there are more than
168 million wireless customers in this country as compared to roughly
38 million when the 1996 Telecommunications Act was signed. This
represents a phenomenal growth rate of 425 percent. And why has our
industry enjoyed such a dramatic growth rate? Because of intense
competition among service providers, a growing number of service
options, technological advancements, and prudent, forward-looking
government policies that allowed the market to determine the fate of
the industry rather than government mandates.
However, with success, be it athletic, political, or business,
comes greater scrutiny. It has become apparent to me over the past 11
months that the wireless industry is becoming viewed more as some sort
of monopoly utility rather than the hyper-competitive industry that we
are. To set the record straight there are currently more than 180
wireless service providers who compete in the U.S. An impressive 93
percent of Americans live in markets served by four or more operators,
and a nearly ubiquitous 98 percent of Americans live in a market served
by three or more operators. Whether urban or rural, American wireless
consumers have choice and the power to exercise it. Clearly, wireless
customers have a multitude of service providers to choose from in the
wireless market, and as a result, receive more value for their wireless
dollars. Last year, consumers increased their individual usage of voice
minutes by 22 percent while paying 13 percent less per minute according
to data released last week by the FCC.
Customers not only have carrier choice, but also choice among
service features. Accordingly, another potential choice we want to
offer our customers is a wireless 411 service, but only for those
customers who want their number listed. Many wireless customers,
particularly those in small businesses who spend most of their workday
away from an office and a landline phone, rely upon their wireless
phone as their primary business line. We believe these customers would
welcome the option of having their wireless numbers be made available
in a 411 service. A survey conducted by the Small Business
Administration in March of this year entitled ``A Survey of Small
Businesses' Telecommunications Use and Spending'' confirms that
wireless services are now used by 73 percent of small businesses, and
25 percent of all small businesses spend more for wireless services
than they do for local and long distance telephone services combined.
Unfortunately, those small businessmen and women who use their wireless
phones as their primary business line currently have no other choice
but to pay to have their number listed if they have that option at all,
which many do not.
Seeing this void in the marketplace, in February 2002, the wireless
industry first contemplated the concept of providing its customers with
a wireless directory assistance service. During the past two and a half
years, CTIA serving in the role of a coordinator and six of the seven
largest carriers: AT&T Wireless, Cingular, Sprint PCS, Nextel, T-
Mobile, and Alltel have proceeded with a thoughtful approach to provide
a service that our customers want and currently cannot receive.
Over 8 million Americans have ``cut the cord'' and use their
wireless phone exclusively; many have no way to have their numbers
listed and those that do must incur a cost. Unlike the traditional
landline directory, which lists all customers by default, the wireless
411 service being developed will only include consumers who
affirmatively choose to participate. Participating wireless carriers
will ask their customers if they want their number included. If they
do, these numbers can be added to the existing directory assistance
database and be made available by the 411 operator to customers who
specifically ask for it.
If a customer chooses not to be included, they will not have to do
anything--the wireless 411 database will only include numbers that
customers affirmatively add to the list--all other numbers are
automatically excluded. The only way a number will be listed is if the
customer specifically asks that it be made available. In addition,
unlike the current wireline directory system, all of the national
wireless carriers have indicated they will not charge customers who
elect to remain unlisted.
A mutual concern of both the sponsors of S. 1963 and the wireless
industry is the issue of a published directory. Let me put to rest any
misperception that there will be a published directory associated with
this service. Wireless numbers from this database will not be published
in a directory. Additionally, the aggregated database of wireless
numbers will not be sold to any third-party, nor will it be available
anywhere on the Internet.
The wireless industry has historically advocated for strong privacy
measures for its customers such as prohibiting the use of automated
systems to dial wireless phone numbers and encouraging its subscribers
to register their wireless number on the Federal Trade Commission's
``Do Not Call'' list. Likewise, privacy concerns are paramount in this
initiative. We have attempted to make every assurance that there is no
invasion to a customer's privacy as a result of their inclusion in this
database. Moreover, consumers who choose to be listed will have an
added protection against telemarketers because of the current
restrictions on the use of automated dialers calling wireless numbers.
It is envisioned that the wireless 411 system will operate by
having participating carriers contact their customers and offering them
the choice of participating in the service. If they choose to opt-in,
their wireless contact information will be confirmed by the carrier and
sent to the database aggregator, Qsent, at which point Qsent will
integrate that information with the opt-in listings provided by
wireless customers of all of the carriers who support this service. By
providing a single aggregated database for opted-in wireless listings,
operators can make a single query to the Qsent database when a customer
calls 411 (from either a wireline or wireless phone) to request a
wireless listing.
While in Congress, I was privileged to serve on the House Energy
and Commerce Committee and worked on several privacy-related bills
dealing with spamming, slamming, cramming, Do-Not-Call, and the privacy
title of the Gramm/Leach/Bliley Act. All of those bills were introduced
as a result of bad corporate behavior. With the legislation we are
discussing today, there has been no bad behavior; in fact, the behavior
so far is to fashion the service in a manner most protective of
customer privacy. Moreover, as I keep making the point, the wireless
industry is such a hyper-competitive business that if carriers that
choose to participate in a wireless 411 system betray the confidence of
their customers, as sure as I am sitting here, those customers will
vote with their feet and switch to another service provider.
We believe the wireless 411 service is yet another example of the
efforts of wireless companies to provide their customers with choice.
It will be opt-in only and participating carriers indicate there will
be no charge for opting out. There will be no published directory, no
Internet access to the numbers, nor will there be any third-party sale
of the numbers.
The multitude of service and feature options and calling plans,
better service for lower prices, free voice-mail, caller ID, and 3-way
calling are all competitive responses to satisfy consumer demand.
Wireless 411 is one more attempt to provide a service to a growing
number of wireless customers. We know the service may not be for
everyone, but many have asked for it and we urge you to allow these
ultra-competitive companies to offer the wireless 411 service as they
propose. Customers truly are the ultimate regulators in a competitive
market and they are capable and willing to decide for themselves
whether a service is viable.
In closing, as someone who used to sit on the other side of a
nearby dais, I know the importance that your constituents place on
protecting their privacy. I also know that the wireless industry has a
proven track record of supporting legislation to protect its customers'
privacy. My concern with S. 1963 is that it offers no more privacy
protection than the wireless industry's own proposed 411 service, but
if enacted, the legislation may deter future innovation and industry
initiatives for fear government mandates will step in even before new
services get off the ground.
I welcome any questions you may have.
Senator Allen. Thank you, thank you Mr. Largent, on behalf
of Senator Wyden and myself, and Senator Ensign and all of the
Senators here, we agree with you clearly on the Internet tax
moratorium measure, thanks for that nice little plug, to try to
get the House to pass that. Now, we'd like to hear from you Mr.
Rotenberg.
STATEMENT OF MARC ROTENBERG, EXECUTIVE DIRECTOR, ELECTRONIC
PRIVACY INFORMATION CENTER; ADJUNCT PROFESSOR, GEORGETOWN
UNIVERSITY LAW CENTER
Mr. Rotenberg. Thank you very much, Mr. Chairman and
Members of the Committee, it's a real honor to be back before
you today to talk about wireless privacy and the interests of
consumers.
My statement is very similar to the views that were
expressed by Consumer's Union and the AARP, and the Privacy
Rights Clearinghouse. You have heard on this panel, I think,
what is a commonly shared view, that privacy protection will be
absolutely critical for consumer acceptance of the wireless
directory, all we're really debating is how best to achieve
that.
Also, I listened to the comments of Mr. Strigl from Verizon
and I thought his position was admirable, not wanting to go
forward if he thought there would be a privacy risk for his
customers, I've looked at the principles proposed by CTIA and
Qsent, and I think they're reasonable privacy principles that
would certainly provide some protection for customers.
But in answer to your question, Mr. Chairman, why this is
not sufficient, and why legislation is important, and why I
hope you will move quickly on S. 1963, I'd like to remind you
of a hearing that took place in this committee room 5 years ago
about Internet advertising. And at that time, we were talking
about a company called ``Doubleclick.'' And the Doubleclick
company proposed an Internet-based advertising model that
answered all of the privacy concerns that the public had
raised. They said, ``We have a wonderful, fast-moving,
competitive industry,' they said that privacy protection was
important, they said it was too soon for Congress to act, and
they said they would do Internet-based advertising that did not
require the correction of personal identifiable information.
And the privacy groups, and the consumer groups and everybody
else said, ``This sounds great. We support you, we think it's
innovative, we think it respects privacy, we think it
demonstrates in some areas, and in fact, Mr. Chairman, it's not
necessary for Congress to regulate.'' And what happened? A few
months later, the Doublclick company learned about a database
room called Claritas, the largest catalog marketer in the
United States and said, ``Well, we had the old business model
that didn't require the correction of personal identifiable
information, but you know, if we incorporate that data with
Claritas, they make available to us, if we require it, we'll
have a better, more efficient, more profitable business
model,'' and they quietly began to revise their privacy
policies.
And it became apparent over time, Mr. Chairman, that
Doubleclick was not able to maintain their commitment to their
high privacy ground, but in fact they were going to collect
customer information and that was the point when the public
objected, when this Committee held hearings, and when the FTC
began to look more closely at the question of what is required
to protect consumer privacy in these emerging services.
Now, we have had similar experiences, with many other
companies, Amazon, Yahoo and others, that come forward with
very strong privacy representations. And then, over time,
business models change, and the privacy bar drops down. The one
thing that does not change is that those consumers who provided
their personal information in the first instance, under the
representation that their personal data would be protected,
that it would not be disclosed to others, now find themselves
having to deal with telemarketers, spam, sale to data brokers,
and worse.
The reason, Mr. Chairman, I think we need this legislation
is to establish the baseline. Establish the floor. There is
nothing, nothing that will prevent Verizon or CTIA from
developing stronger safeguards, from using the free market, and
advertising and outreach to say, ``We will do a better job
protecting privacy than our competitors,'' we welcome that, and
we encourage that. But to propose that we go forward with the
service that effectively flips the switch on privacy protection
for mobile customers, that means that information that we used
to assume was private, can now lead to us receiving calls from
people who we don't know, who we didn't give our numbers to,
and will, on top of it, we will have to pay the cost for those
calls, I think will create the type of chaos, exactly what
Senator Boxer mentioned at the opening.
And, Mr. Chairman, I've had one other experience with
telecommunications privacy, relevant to this discussion, and
that's with Telecom Consumer Protection Act. It was done in
1991, it was an excellent law, but the one piece that was not
done when that law passed was the ``do not call'' list. It took
twelve years to get that done. By the time it happened, sixty
million Americans said, ``Enough is enough.''
I urge you not to wait on this legislation. You do not want
to happen with the privacy of cell phone numbers what happened
with telemarketing in this country. Thank you.
[The prepared statement of Mr. Rotenberg follows:]
Prepared Statement of Marc Rotenberg, Executive Director, Electronic
Privacy Information Center; Adjunct Professor, Georgetown University
Law Center
I appreciate the opportunity to appear before the Committee today
to discuss privacy issues raised by a proposed wireless directory for
customers of wireless of telephone services. My name is Marc Rotenberg.
I am the Executive Director of the Electronic Privacy Information
Center in Washington, and I have taught the Law of Information Privacy
at Georgetown since 1990. As both an advocate and academic, I have
participated in many of the leading privacy debates in this country.
With me this morning is Chris Jay Hoofnagle, Associate Director of
EPIC.
Summary
As the wireless industry develops a directory of numbers for
wireless devices, Congress should act to safeguard privacy and to
create legally enforceable rights with respect to data in the wireless
directory. We believe the industry shares our concerns that privacy
protection will be important for this information, and also recognizes
that many other new wireless services could be jeopardized if strong
privacy standards are not established. However, we are not persuaded
that wireless directories can be administered fairly without legal
rights for the millions of individuals who will be enrolled in the
system. These new directories raise the privacy risks of unwanted
telemarketing, SMS spam, junk faxes, and contacts from undesirable
callers, including stalkers.
It is clear that there are very high levels of public support for
strong privacy safeguards for telephone services. More than 60 million
American households signed up for the Do Not Call service so that they
would not receive telemarketing calls at dinnertime. Millions of
American household have unlisted and/or unpublished telephone numbers.
According to one survey, 35 percent of households nationwide do list or
publish telephone numbers. In\1\ major metropolitan areas in
California, nearly 70 percent of telephone numbers are unlisted.
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\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/.
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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.]