[House Hearing, 108 Congress]
[From the U.S. Government Printing Office]
AN EXAMINATION OF WIRELESS DIRECTORY ASSISTANCE POLICIES AND PROGRAMS
=======================================================================
HEARING
before the
SUBCOMMITTEE ON TELECOMMUNICATIONS AND THE INTERNET
of the
COMMITTEE ON ENERGY AND COMMERCE
HOUSE OF REPRESENTATIVES
ONE HUNDRED EIGHTH CONGRESS
SECOND SESSION
__________
SEPTEMBER 29, 2004
__________
Serial No. 108-122
__________
Printed for the use of the Committee on Energy and Commerce
Available via the World Wide Web: http://www.access.gpo.gov/congress/
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__________
------------------------------
COMMITTEE ON ENERGY AND COMMERCE
JOE BARTON, Texas, Chairman
W.J. ``BILLY'' TAUZIN, Louisiana JOHN D. DINGELL, Michigan
RALPH M. HALL, Texas Ranking Member
MICHAEL BILIRAKIS, Florida HENRY A. WAXMAN, California
FRED UPTON, Michigan EDWARD J. MARKEY, Massachusetts
CLIFF STEARNS, Florida RICK BOUCHER, Virginia
PAUL E. GILLMOR, Ohio EDOLPHUS TOWNS, New York
JAMES C. GREENWOOD, Pennsylvania FRANK PALLONE, Jr., New Jersey
CHRISTOPHER COX, California SHERROD BROWN, Ohio
NATHAN DEAL, Georgia BART GORDON, Tennessee
RICHARD BURR, North Carolina PETER DEUTSCH, Florida
ED WHITFIELD, Kentucky BOBBY L. RUSH, Illinois
CHARLIE NORWOOD, Georgia ANNA G. ESHOO, California
BARBARA CUBIN, Wyoming BART STUPAK, Michigan
JOHN SHIMKUS, Illinois ELIOT L. ENGEL, New York
HEATHER WILSON, New Mexico ALBERT R. WYNN, Maryland
JOHN B. SHADEGG, Arizona GENE GREEN, Texas
CHARLES W. ``CHIP'' PICKERING, KAREN McCARTHY, Missouri
Mississippi, Vice Chairman TED STRICKLAND, Ohio
VITO FOSSELLA, New York DIANA DeGETTE, Colorado
STEVE BUYER, Indiana LOIS CAPPS, California
GEORGE RADANOVICH, California MICHAEL F. DOYLE, Pennsylvania
CHARLES F. BASS, New Hampshire CHRISTOPHER JOHN, Louisiana
JOSEPH R. PITTS, Pennsylvania TOM ALLEN, Maine
MARY BONO, California JIM DAVIS, Florida
GREG WALDEN, Oregon JANICE D. SCHAKOWSKY, Illinois
LEE TERRY, Nebraska HILDA L. SOLIS, California
MIKE FERGUSON, New Jersey CHARLES A. GONZALEZ, Texas
MIKE ROGERS, Michigan
DARRELL E. ISSA, California
C.L. ``BUTCH'' OTTER, Idaho
JOHN SULLIVAN, Oklahoma
Bud Albright, Staff Director
James D. Barnette, General Counsel
Reid P.F. Stuntz, Minority Staff Director and Chief Counsel
______
Subcommittee on Telecommunications and the Internet
FRED UPTON, Michigan, Chairman
MICHAEL BILIRAKIS, Florida EDWARD J. MARKEY, Massachusetts
CLIFF STEARNS, Florida Ranking Member
Vice Chairman ALBERT R. WYNN, Maryland
PAUL E. GILLMOR, Ohio KAREN McCARTHY, Missouri
CHRISTOPHER COX, California MICHAEL F. DOYLE, Pennsylvania
NATHAN DEAL, Georgia JIM DAVIS, Florida
ED WHITFIELD, Kentucky CHARLES A. GONZALEZ, Texas
BARBARA CUBIN, Wyoming RICK BOUCHER, Virginia
JOHN SHIMKUS, Illinois EDOLPHUS TOWNS, New York
HEATHER WILSON, New Mexico BART GORDON, Tennessee
CHARLES W. ``CHIP'' PICKERING, PETER DEUTSCH, Florida
Mississippi BOBBY L. RUSH, Illinois
VITO FOSSELLA, New York ANNA G. ESHOO, California
STEVE BUYER, Indiana BART STUPAK, Michigan
CHARLES F. BASS, New Hampshire ELIOT L. ENGEL, New York
MARY BONO, California JOHN D. DINGELL, Michigan,
GREG WALDEN, Oregon (Ex Officio)
LEE TERRY, Nebraska
JOE BARTON, Texas,
(Ex Officio)
(ii)
C O N T E N T S
__________
Page
Testimony of:
Ahn, Sunny K., Chief Executive Officer, Context Connect, Inc. 48
Boxer, Hon. Barbara, a U.S. Senator from the State of
California................................................. 28
Cox, Patrick M., Chief Executive Officer, Qsent, Inc......... 43
Hammond, W. Lee, Vice President and Member, AARP Board of
Directors.................................................. 40
Largent, Hon. Steve, President and CEO, Cellular
Telecommunications and Internet Association................ 36
Material submitted for the record by:
Ahn, Sunny K., Chief Executive Officer, Context Connect, Inc.
letter dated October 6, 2004, to Hon. Joseph R. Pitts...... 81
Montezemolo, Susanna, Legislative Representative, Consumers
Union, prepared statement of............................... 75
Strigl, Dennis F., President and CEO, Verizon Wireless,
prepared statement of...................................... 83
(iii)
AN EXAMINATION OF WIRELESS DIRECTORY ASSISTANCE POLICIES AND PROGRAMS
----------
WEDNESDAY, SEPTEMBER 29, 2004
House of Representatives,
Committee on Energy and Commerce,
Subcommittee on Telecommunications
and the Internet
Washington, D.C.
The subcommittee met, pursuant to notice, at 10:06 a.m., in
room 2322, Rayburn House Office Building, Representative
Charles F. Bass, presiding.
Members present: Representatives Stearns, Gillmor, Shimkus,
Pickering, Bass, Walden, Terry, Markey, Wynn, Stupak, and
Barton (ex officio).
Also Present: Representative Pitts.
Staff present: Neil Fried, majority counsel; Jaylyn Jensen,
majority professional staff; Will Carty, majority legislative
clerk; Howard Waltzman, majority counsel; Will Nordwind,
majority counsel; David Vogel, minority staff assistant; and
Peter Filon, minority counsel.
Mr. Bass. This meeting is called to order. I waive
explanation. I just want to mention that Chairman Upton is
currently in a DOD Authorization Conference Committee Report.
His Decency Bill has been added to that bill so Commerce
Committee members are now involved in the DOD conference. He
regrets not being here today. I am pleased to stand in his
stead.
Without objection I would like to have my opening statement
made part of the record and I will at this time read into the
record Chairman Upton's opening statement.
Good morning. Today's hearing is entitled, ``An Examination
of Wireless Directory Assistance Policies and Programs.'' Like
many Americans I often carry a cell phone. I also have
landlines at home and at work so I have not cut the cord
completely.
However, unlike my landline phone which I leave behind the
second I walk out of the house, my cell phone is oftentime
attached to my hip. Wherever I go whether it is in the car to
drop the kids at school, to the grocery store, to Lake Michigan
Beach, or out to dinner with my wife. And unless I tell people
to call me or there is an emergency, I don't want people
calling my cell phone because of the simple fact I closely
guard my cell phone number and it is not listed in any
directory.
That is the way I want to keep it for the foreseeable
future. I suspect that is the way many Americans want to keep
it, too. To folks like me this is a matter of simple privacy so
when we hear about a proposed industry Wireless Directory
Assistance Project I, like many Americans, get justifiably
concerned.
However, I am also mindful that many Americans,
particularly small business people like plumbers, real estate
agents, delivery people, and electricians have cut the cord and
may very well be interested in having their numbers listed in a
directory. As a consumer the proposed industry Wireless
Directory Assistance Project raises a number of critically
important fundamental questions which need to be answered and
answered correctly by the industry before I would be
comfortable with such a directory.
For instance, would the directory be opt-in for the
consumer based on clear and conspicuous mechanism? It better
be. Two, will consumers be charged to keep their numbers out
such a directory? They better not be. Three, regardless of any
legalese in their existing service contracts will consumers be
able to keep their numbers out of such a director? They better
be able to.
Four, if consumers choose to be listed will their numbers
be published or exposed or sold to third-party telemarketers
without the consumer's consent? They better not be. Fifthly and
last, will consumers be able to change their minds later and
get out of the directory at no charge? Chairman Upton things
they ought to be able to.
Recently, I, Chairman Upton, joined Chairman Barton and
Senator McCain in asking for the six major wireless carriers to
respond on the record in writing to get answers to these types
of questions. We have received written responses from all those
carriers and the replies are encouraging. I will enter those
responses into today's record.
Today we will also hear from the CTIA who will run the
Wireless Directory Assistance Project to see how its answers
jibe with those of the carriers. I would also note that Verizon
Wireless has announced its intention to not participate in the
proposed Wireless Directory Assistance Project. This is a
significant factor in this debate because if other companies
participate and do not respect consumer wishes and privacy,
then I suspect consumers will have the opportunity to ``vote
with their feet'' and flock to Verizon wireless.
Above all, the wireless industry has been a model of
competitiveness in large part due to Government restraining
itself from over-regulating it. Two able members of this
committee, Mr. Pitts and Mr. Markey, have introduced
legislation to regulate the Wireless Directory Assistance.
In particular, I believe Mr. Pitts and Mr. Markey's
legislation has forced the wireless industry to soberly reflect
upon the Wireless Directory Assistance Project and how it seeks
to construct and run it. I congratulate those members for their
foresight, persistence, and commitment to consumer privacy. It
truly has made a difference.
At the moment I am inclined to think that on-the-record
commitments to us from the industry combined with competitive
forces and continued oversight from this subcommittee preclude
the need for legislation action at the present time. However,
given the seriousness of this issue for consumers and their
privacy, it will not take much convincing to move such
legislation if any of those commitments come up short in the
future. We will all be watching the industry like a hawk.
Opening statements. Mr. Stupak.
Mr. Stupak. Thank you, Mr. Chairman. I will be brief.
Thanks for holding the hearing and I want to thank our
witnesses for appearing today, especially Senator Boucher.
I am glad to hear that the wireless industry is revamping
its original plan to create a 411 cell phone directory. Cell
phones are different from landlines. Cell phone users are
charged for incoming and outgoing calls. Those users should not
have to pay for any unwanted incoming calls.
With cell phones privacy has always been a given unlike
regular landline phones and their phone directories which
require a customer to opt-out to keep their numbers unlisted. I
look forward to hearing today, Mr. Chairman, about whether this
legislation is really needed to ensure that consumer cell phone
privacy is protected. It is an interesting debate and I look
forward to hearing from our witnesses. I would yield back the
balance of my time.
Mr. Bass. Thank you, Mr. Stupak.
Mr. Walden.
Mr. Walden. Thank you very much, Mr. Chairman. I want to
associate myself with the comments that you made in your
opening statement. I also want to welcome Mr. Patrick Cox from
Oregon who will be testifying later in this hearing. I think we
all are concerned about privacy and people's access to our cell
phone numbers and some of the things that go along with that. I
think the wireless industry has come a long way and I look
forward to the testimony of all of our witnesses today, and
especially want to extend a warm welcome to Patrick Cox.
Mr. Bass. The gentleman yields back.
Mr. Wynn.
Mr. Wynn. Thank you, Mr. Chairman. I, too, appreciate you
calling this hearing on this very interesting issue.
Approximately 5 million people already pay to list their
wireless numbers in traditional wireline directories. Many of
these individuals have at-home businesses or small businesses
with a need for mobility. Businesses that have a need for this
service include realtors, plumbers, any at-home business, and
also obviously electricians.
For these individuals the option to list their wireless
phone numbers is not a luxury, but a necessity to ensure the
viability of their business. In response to this need the
wireless industry, headed by CTIA, began development of a
national wireless phone directory.
The industry is almost finished creating an all opt-in
directory where each participating carrier will ask new and
existing customers if they want to be included. Importantly,
CTIA and the participating carriers have affirmed that they
will not sell this directory to a third party and that there
will not be a published version of this directory.
Aside from commercial customers, more than 8 million
Americans have cut the cord and only use wireless phones in
their home. Since a wireless number is their primary phone
number, these individuals should be given the opportunity to
list their numbers in a directory. The industry has been a
great model to show how light regulation of an emerging
industry fosters competition and leads to a better product for
its consumers.
I believe we should allow the wireless industry to proceed
with its plans to complete development and implementation of a
national wireless directory. I am very interested in the
testimony today, but I want to mention one thing. The industry
has made representation that this will be an opt-in system and
I think that is fundamental to our discussions here today that
consumers will have control over whether or not they are
included.
That being the case, we have an initial guarantee of
privacy that is fundamental to this process. I am looking
forward to the testimony and hope that we can envision a system
or create a system in which we don't have to over-regulate a
problem that does not yet exist. Rather, we can watch and see
if the option approach and the existing level of competition is
sufficient to protect consumers' interest.
Thank you for the time.
Mr. Bass. The gentleman yields back.
Gentleman from Illinois, Mr. Shimkus.
Mr. Shimkus. This is one of these areas where the evolution
of technology is just amazing and great. We have now an issue
where people want to be able to get phone numbers but they
don't want their phone numbers to be the one to get. I don't
know how we get involved with this and how we dispute this but
it is a good hearing. I look forward to learning from both
sides and I yield back the time.
Mr. Bass. The gentleman yields back.
The gentleman from Nebraska, Mr. Terry, do you have an
opening statement?
Mr. Terry. I will waive.
Mr. Bass. The gentleman waives.
Mr. Pitts is not a member of the subcommittee but I would
ask unanimous consent since he is a sponsor of the bill to
allow him to participate in the hearing. If there is no
objection, I recognize Mr. Pitts for an opening statement.
Mr. Pitts. Thank you, Mr. Chairman. Thanks so much for
allowing me to join your subcommittee today. I am pleased that
this subcommittee is taking a look at the Wireless Directory
Assistance Data base. Mr. Markey has been a great partner in
drawing attention to this issue. He should be commended for his
clear and consistent voice for consumer privacy.
As you may know, I have some serious privacy concerns about
this and I will share them today, Mr. Chairman. It was 18
months ago when I first heard about the wireless director. It
was a very small story in some trade publications. I was
shocked that something so important to consumer privacy was not
more public.
We have several studies that show a majority of consumers
opposed to such a violation of their personal privacy. The
Pierz study and the AARP study both show that a majority of
Americans are opposed to being in the directory. I would like
to submit both studies for the record.
Mr. Bass. Without objection.
[The material follows:]
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[The Pirez study can be obtained from the Pierz Group
itself and they can be contacted through their website at
http://www.pierxgroup.com/]
Mr. Pitts. When I first heard of this public listing, my
first instinct was to put an end to the whole thing. I don't
want just anyone to have the number of my cell phone. But as I
read more about it, I came to realize that certain customers,
particularly some small businesses and those who have cut the
cord, could benefit from it.
I am sure we will hear more about that from Mr. Largent. I
agree with him that this could be a good service. And that is
why Mr. Markey and I crafted our legislation to allow this
directory to move forward under a few common sense conditions.
Eighteen months ago the full committee chairman joined Mr.
Markey, Ms. Eshoo, Mr. Burr, and I in sending a letter to CTIA
asking more questions about this directory. The response we
received in meetings was revealing. We were told that we were
interfering with business. We were told that making this
directory all opt-in was unworkable.
We were told that the companies own the cell phone numbers,
not individuals. We were also told that they would not make any
money if we told them they couldn't charge to be unlisted. We
were told basically that the companies reserved the right to do
anything they wanted.
I am pleased to learn that today the industry supports the
opt-in provision in the bill, that they agree to not charge
users to be unlisted, and that they essentially support the
components of the bill. That is great news, and we have
definitely come a long way on this from 18 months ago when we
first talked about it.
But, Mr. Chairman, a number of concerns remain and these
are the current contracts for all five of the major carriers.
Deep in each contract, that all users have signed, is language
that permits companies to list numbers in a Directory
Assistance Data base and even charge to be unlisted. Mr.
Chairman, I would like unanimous consent to insert these
contracts in the record.
Mr. Bass. Without objection.
[The material follows:]
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Mr. Pitts. Thank you, Mr. Chairman.
The carriers call this ``boiler plate language'' that has
always been there. They point to the fact that numbers have not
been listed for 20 years as evidence that they won't do it now.
This is a dangerous line of reasoning. The bottom line is this
legislation is necessary because all we have are promises from
the carriers.
Promises that they will make this opt-in. That is only from
5 of the 180 small companies. And promises they won't charge
users. While those promises are greatly appreciated, we need a
law. These contracts give them a way out of those promises.
Besides, the decision to break a promise won't be made on
the basis of a letter to a few politicians. It will be made
according to a business plan. As a conservative former business
owner myself, I am sympathetic to that position. My gut is to
oppose more regulation. But there are certain values worth
protecting for consumers and privacy is one of them.
There are a number of issues I could raise. I won't raise
them all but I know that CTIA is not wanting to do anything
harmful but the issues that we will raise today in the hearing
must not be overlooked. While on its face a directory for cell
phones may sound like a good idea, we need to explore further
the ramifications of such a directory and what an invasion of
privacy this will be.
Some of the questions I hope the panel will address are
what are the legal status of existing service agreements that
contain legal authorization to list numbers in a public
directory? What happens when you change your mind? Will
documentation be provided that prove the industry will continue
to pursue an opt-in for the directory? How will users be
offered the opportunity to opt-in? Will all users, new and
existing, receive a chance to opt-in? Will carriers who choose
not to participate at the current time be subject to the
promise that you make today if they decide to participate in
the future?
Again, Mr. Chairman, thank you so much for holding this
hearing and I look forward to hearing our witnesses and look
forward to working with you further on this issue.
Mr. Bass. The gentleman's time has expired.
The gentleman from Florida, Mr. Stearns.
Mr. Stearns. Good morning and thank you, Mr. Chairman. As
many of you know, consumer privacy continues to be a major
focus involved with other subcommittees, one which I chair, the
Subcommittee on Commerce, Trade, and Consumer Protection.
Including yesterday's hearing we have had eight hearings on
this matter and I think we have developed a number of specific
actions that I believe a data collection organization should
take when compiling any personal identifiable information from
a consumer and that includes his or her cell phone number.
First, the organization must provide the consumer with a
clear and conspicuous notice describing the manner in
collecting and purpose for using that person's information.
Second, Mr. Chairman, the consumer should be allowed to
preclude the disclosure of that information. These principles
were originally developed as I looked into how businesses
collect information to market services to consumers. However, I
think that they provide appropriate guidelines regarding the
topic that is before us today, namely the proposed 411 wireless
directory.
Most people value the privacy that wireless phones can
provide. AARP's testimony notes that is the case based upon the
survey they conducted and that privacy should be protected.
However, I also firmly believe in market forces and consumer
choice. Should a wireless consumer want to disclose his or her
cell number as a part of a wireless 411 directory, they have
every right to request that service and wireless companies have
the right to provide it.
Having said that, prudent safeguards must be in place
before such a service is implemented. The consumer must be
given a choice as to whether or not he wants to allow his cell
phone number to be disclosed in a directory. That choice should
be offered in the form of a clear and conspicuous notice with
the opportunity to opt-in or out of that service.
Furthermore, in no way should the consumer be charged for
not wanting his number published. It is my understanding that
this is the direction that these wireless companies are taking
in developing this service and that is a positive note.
However, there remains a number of issues of concern for
members and the public as to how this directory will work and
what back doors, if any, could be used to exploit this new
service for other motives.
I look forward to the testimony. I also look forward to our
formal member, Steve Largent, his testimony, and welcome him
this morning, too.
Mr. Bass. The gentleman yields back.
The gentleman from Massachusetts, Mr. Markey.
Mr. Markey. Thank you, Mr. Chairman, very much. It is like
all-star weekend here. We have Steve Largent and Barbara Boxer
back here to visit us in the House of Representatives. We
welcome you both and everyone else who is here today.
Our bill now has 50 co-sponsors. That is the bill that Joe
Pitts and I have introduced. Senator Boxer and Senator Specter
have introduced an identical bill in the U.S. Senate. It is
progressing quite well. This is one of those self-evident
truths that when the American people hear about it want to
ensure that they are able to gain the attention of.
Chairman Barton of this committee and I co-founded the
Privacy Caucus about 5 or 6 years ago proving that the far left
and the far right can agree on issues that protect the
individual. Now, it does isolate the pragmatic middle,
unfortunately, as the far left and right agree on the privacy
issues of people but, nonetheless, at the end of the day this
is something that all Americans do want to see as part of their
lives.
At the core of this privacy is routed in freedom and the
freedom to not have your personal life intruded upon without
your permission. What we have today in the wireless revolution
is the coupling of the freedom to move with a wireless phone
that can allow you to stay in communication and, at the same
time, the freedom not to be bothered by people who you don't
want to be communicating with you, that you have the right to
be left alone.
Now, when Mr. Pitts and I first introduced our bill, the
wireless industry originally told us that asking consumers'
permission before listing them in a 411 data base would be too
onerous. They said that the provision in our bill that
prohibited wireless companies from charging new fees to
consumers who wanted to remain unreachable or unlisted was
unfair.
Last year after we asked the wireless industry for
information on their plans, the industry wrote to Mr. Pitts and
to myself, to Chairman Barton and to several other members
about their directory plans telling us at the time that,
``Wireless Directory Assistance offers consumers great
benefits. These consumers will want to have their wireless
number included in the Wireless Directory Assistance Data base
and we are asking for this service.'' I ask unanimous consent
that the letter from the industry to the committee be included
in the record.
Mr. Bass. Without objection.
[The letter follows:]
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Mr. Markey. Now, notwithstanding the industry's contention
last year that consumers were evidently asking for this
service, how did the industry advise consumers of the good news
that the industry was planning on implementing a 411 data base?
Well, the way consumers often find out about such good news is
in the fine print of their contracts that they were asked to
signed as part of having a wireless service.
The industry also told us in their letter to us last year
that, ``No customer will be denied the opportunity to provide
consent before they are listed in the Wireless Directory
Assistance Data base. Yet, in the fine print of many of these
wireless contracts the companies disclosed that in order to
sign up for service, customers had to sign away their privacy
rights. That is just plain wrong. Those contracts went on for
months and months.
Recently, many of the carriers have had second thoughts.
Several of the carriers appear to have changed their minds. The
industry is now saying that they will give consumers the chance
to opt-into the service and carriers are now saying they won't
charge extra fees. But given the track record of the industry
over the last 18 months, one can imagine our reaction when the
industry now argues that we shouldn't pass a law even before
the service is launched.
A couple of years ago the subcommittee worked on a
bipartisan bill that Mr. Shimkus and Mrs. Eshoo had developed
to establish a 911 as a national emergency number. As part of
that bill I successfully offered an amendment to include strong
privacy protections for use of wireless location information.
We did this before the industry began fully implementing such
technology and that bill is now law with the support of the
wireless industry.
This is a very good bill. It is in line with the consistent
privacy laws which our committee has placed on the books. No
one by law can know what phone numbers you have dialed. They
can't find out. People can't look that up. No one can find out
what cable shows you watch. That is also against the law, laws
that we passed here in this committee. This similarly is
something that the American people want and deserve to have as
a privacy protection in the modern communications era.
I thank you, Mr. Chairman, very much and it is my great
honor to have Senator Boxer here with us today.
Mr. Bass. The Chair thanks the gentleman from
Massachusetts. There being no further opening statements, the
Chair will move to our first panel and welcome Senator Barbara
Boxer from California.
As you know, Senator Boxer, we have a tradition of limiting
witness' testimony to 5 minutes. I know you are only going to
be able to stay until 10:30 so that probably won't be a big
issue for you. Without any further ado, I recognize you for 5
minutes.
STATEMENT OF HON. BARBARA BOXER, A U.S. SENATOR FROM THE STATE
OF CALIFORNIA
Senator Boxer. Since I have been here for 30 minutes I will
stay here for the full 5. Maybe even 5\1/2\.
Mr. Chairman, thank you so much for the opportunity to
testify. As you know, Congressman Markey, Congressman Pitts
have teamed up to take the lead on this cell phone privacy
bill. In the Senate I have had the honor to work with Senator
Specter and a bipartisan group of Senators on companion
legislation.
I am very pleased to report to you today that the Senate
Commerce Committee voted to approve the Wireless 411 Privacy
bill last week. I particularly want to thank the Consumers
Union and the AARP for their work in favor of this legislation.
Speaking of the AARP, Mr. Chairman, they did a very
thorough poll on this whole idea and I think it is rather
stunning what they came up with. I would disagree with my
dearest friend and colleague, Mr. Markey, when he says this is
the left and the right. This is everyone. Here is what it says.
``The idea of a wireless phone directory is troubling to
all consumers but especially older consumers. Only 5 percent of
cell phone users aged 65 and older said they want their number
to be listed in a wireless phone directory. Among all cell
phone users nine out of 10 said they value phone number privacy
and view the lack of a directory as a good things.'' I think
that is rather remarkable. It is very rare that we see the
American people gather around the notion of privacy as they
have here in this particular area.
Now, all we say in our bill, Mr. Chairman, is that if there
is a wireless directory, then every cell phone user has to
approve being listed in that directory and there should be no
charge for exercising that right. Pretty straight forward.
Mr. Chairman, as has been pointed out, a cell phone is far
different from a home phone. It is far more intrusive because
we take our cell phones with us wherever we go. We give our
children cell phones in case of an emergency. We give our
colleagues at work our cell phone numbers to reach us wherever
we are whenever they need us. We pay whenever we use it even
for incoming calls.
A communication tool as personal and portable as a cell
phone must meet a high standard of respect for privacy rights,
perhaps the highest. The Wireless 411 Privacy Bill is our
effort to establish that standard. It is totally fair. It is
very fair to the industry. It just sets out guidelines.
In the Senate Commerce Committee hearing we held last week,
we learned that the cell phone companies have hired a firm to
create a wireless directory. It is going to be ready to go so
we have to act now. We believe our bill is necessary for a
number of reasons and I want to give you one. I know every
member here. I don't know if you are all parents or uncles. Let
me just say this. Imagine your 13-year-old daughter's phone
number in a directory. Any stranger, any stalker could call
her.
For those kids whose parents give them cell phones for
emergencies, imagine someone calling that child and saying,
``Your parents want you to go to the nearest corner and wait
for them.'' We have to think about these things, folks, because
these things happen. I wrote the Driver Privacy Protection Law
that was upheld by the Supreme Court.
It used to be somebody was stalking a young woman, drive
next to her in a car, write down her license number, call the
DMV, and get her home address. We stopped that here in a
bipartisan way and the Supreme Court upheld us. Privacy is
important. It is a safety issue. It is a safety issue.
Now, I know the cell phone companies will tell you this
bill is a solution in search of a problem. It is a solution in
search of a problem. But nothing could be further from the
truth. An unregulated directory of wireless phone numbers is a
problem and if we don't act, then an unregulated cell phone
directory is what we will get. It is much easier for the
industry and I think it is safer for our people to establish
the protections now instead of having to fix the chaos once
Pandora's Box has been opened.
I want to make a point that Mr. Pitts made very clearly. A
lot of people who have had cell phones for a while have signed
agreements that say the following. This is in the small print
in a big contract. ``You consent to our use and disclosure of
your name, address, and identifier, e.g., mobile phone number,
including area code, for any lawful purpose.''
It says if you don't want this to happen, you have to write
them. It is a very complicated deal. So then people say, ``Oh,
let competition win the day.'' People will leave these
companies and go to Verizon because Verizon is very much
against this and I commend them for being smart business
people. It is going to cost a couple of hundred bucks, $100,
$150, $200 to switch and that is not fair to people who want
simply to have their privacy. Privacy should be afforded to
everyone.
As Mr. Largent will tell you today, you have nothing to
worry about. Cell phone people are going to be great and they
may well be but what is to stop them from changing? We need a
uniform standard of privacy for our people.
To sum it up, and I would ask unanimous consent that my
entire statement be placed in the record.
Mr. Bass. Without objection.
Senator Boxer. I hate to use this very direct term but this
is kind of a no-brainer. You have a situation where everyone,
except maybe 5 or 10 percent of the people, want their privacy
protected. You have the cell phone company saying, ``Fine. We
have got no problem with that.'' Let us pass this law so we
know we have done something to protect the people. Let us not
wait for the first stalker to send some kid to a corner and
then we will all be back here saying why didn't we do this.
It is really simple. I want to have a directory, I agree
with Mr. Wynn, for the people who want to get in it. But I
don't want people in it who really want to protect their
privacy. We can do this. I think you have great leadership on
this committee from Mr. Markey and Mr. Pitts. You have strong
support from this legislation. I think the only one against it
are the cell phone folks. Why would they be against it?
I hope you will press Mr. Largent on that point just
because we don't want to be regulated. The fact of the matter
is a directory that simply says if you want to be in it you
have to opt-in is not a big deal. I think it will set good
guidelines and it will make everybody happy.
I thank you very much for this opportunity. I look forward
to working with all of you on this.
[The prepared statement of Hon. Barbara Boxer follows:]
Prepared Statement of Hon. Barbara Boxer, a United States Senator from
the State of California
Mr. Chairman, thank you for the opportunity to testify here today
on the Wireless 411 Privacy bill.
As you know, Congressman Pitts has taken the lead on the issue with
Congressman Markey in the House.
In the Senate, I have had the honor of working with Senator Specter
and a bipartisan group of Senators on companion legislation.
I am happy to report that the Senate Commerce Committee voted to
approve the Wireless 411 Privacy bill last week. I also want to thank
Consumers Union and the AARP for their work in favor of the
legislation.
Mr. Chairman, the Wireless 411 privacy bill is very
straightforward.
We say that if there is a wireless directory, then every cellphone
user has to approve being listed in that directory and there should be
no charge for exercising that right.
Mr. Chairman, a cell phone is far different from home phone. It is
far more intrusive because people take a cell phone with them wherever
they go. We give our children cell phones in case of emergency. We give
our colleagues at work our cell phone numbers to reach us wherever we
are, whenever they need us. And, we pay whenever we use it B even for
incoming calls.
A communication tool as personal and portable as a cell phone must
meet a high standard of respect for privacy rights. The Wireless 411
Privacy bill is our effort to establish that standard.
In the Senate Commerce Committee hearing we held last week, we
learned that the cell phone companies have hired a firm to create a
wireless directory. It will be ready to go within months. As a result,
we have to act now.
We believe our bill is necessary for a number of reasons. One of
the most important reasons is for the protection of our children.
I am very concerned by the prospect of any child's number being
listed.
Imagine your 13 year old daughter's phone number in a directory.
Any stranger, any stalker could call her.
For those kids whose parents give them cellphones for emergencies,
imagine someone calling them and telling them that their parents want
them to go to the nearest corner and wait for them.
I want to make sure that parents can control which numbers are
listed in any directory. And, if they choose not to have their
children's numbers listed, they should not be charged for that choice.
We have worked hard to draft legislation with which the industry
can comply and that will protect consumers.
The AARP and Consumers Union support this legislation. And, every
survey that has been conducted says that people want their privacy
protected in a cell phone directory.
I know that cell phone companies will tell you this bill is a
solution in search of a problem. But nothing could be further from the
truth. An unregulated directory of wireless phone numbers is a problem
and, if we do not act, then an unregulated cell phone directory is what
we will get. It is much safer and easier to establish the protections
in law now than having to fix the chaos once Pandora's box has been
opened.
The industry also says it has changed its contracts to allow for
consumer privacy. But we know that they could just as easily switch
right back.
In addition, many of these old contracts cannot be easily
abrogated. For example, here is one contract (hold up AT&T; contract).
For millions of consumers this contract and others like it still apply.
When companies say that if you don't like the directory, just move
to another company with a better privacy policy, what they are not
telling you is that it will cost you a hundred dollars or more to break
your contract.
We can act to protect consumers from an unregulated directory. They
want that protection and we should make sure they have it.
Mr. Chairman, thank you again for allowing me to testify. Let's
protect our constituents. Let's stand up for privacy.
Mr. Bass. Thank you, Senator Boxer.
Does any member of the subcommittee wish to question
Senator Boxer?
Mr. Stupak.
Mr. Stupak. Just quickly. Under the 411 proposal nothing is
published, no address or no phone number, but like my landline
that is published. Whenever I get a hard line they publish my
phone number, they published my address. Don't you have more
privacy with the 411 proposal than you do with a landline?
Senator Boxer. In your home phone you can opt-out.
Mr. Stupak. And they charge me, right?
Senator Boxer. You have to pay to be unlisted. What we are
pointing out this is a different circumstance here. This cries
out for more privacy protection.
Mr. Stupak. Why----
Senator Boxer. I will explain that if you give me a chance.
Mr. Stupak. Sure.
Senator Boxer. When I call you at your home phone I pay.
When I call you on your cell phone you pay. That is one reason
right there. You could be having tons of phone calls come in.
Yeah, it is true you have a certain number of free minutes but
eventually you start paying. That is one difference.
Mr. Stupak. Sure.
Senator Boxer. Second, with your cell phone you have it
with you all the day and, therefore, it is a constant nuisance
because it could be ringing all day with people wanting to find
you who you don't particularly want to find you. I think this
is a different circumstance. It is more ubiquitous. It is with
you all the time. You have to pay for the calls that you don't
want to have.
If you question people, which the AARP has done, people
view their cell phone in a very different way. Sometimes they
give it to their kids just for emergencies. It is a very
different situation. By the way, we also did set up a no call
list, if you will remember, and the same issue was raised
because people were going crazy so we did protect them from
those.
Mr. Stupak. If we are really concerned about privacy then
why don't we take and pass a law then that says landlines,
can't publish my number, can't publish my home address?
Senator Boxer. I just said I feel differently about
landlines but if you feel that way, go ahead and do it. I am
not going to do it. I think this is a way different situation
and you are putting the chairman to sleep.
Mr. Stupak. I don't think the chairman is sleeping.
Mr. Bass. The gentleman yields back. Any other members of
the subcommittee? Congressman Markey.
Mr. Markey. It would only be to make this point. If our
cell phones were listed, as we left this hearing unfortunately
there would be about 40 people in this audience that would then
try to start calling us, the members of the committee on our
cell phone because it would be listed. People would just be
bothering you as you are walking down the street and walking
around.
We use it in America, this phone, as something that we give
a number to our family members and to other people and they can
call us. That is the point of it. It is on us. If it was
listed, then everyone here who is interested in lobbying us on
the bills would just call us. They would look up our number and
call us on the phone all day long instead of calling us in our
office or calling us at home which is where we have become used
to getting called at home.
It goes right to voice mail anyway at home when we are not
there all day long anyway so it is just a different set of
expectations. But since it is on us and it is on, we would be
bothered all day long by people who we had not given
permission. It is just not something that is available to
everyone. I think Senator Boxer is making the point that over
100 years, for better or worse, is a precedent that has these
numbers listed.
I think in California, Barbara, I think half the people in
California pay each month to have their number unlisted. I
think half of all phone numbers in California are unlisted and
people have to pay. The question here is should the phone
industry make us now pay to have a number unlisted that is
already unlisted and we don't pay to have it unlisted?
They see it as a business that they can make $3, $4, $5
million a years making all Americans pay to get something that
they already have. What is happening is in most states, I think
the minimum number in most states is 20 to 30 percent of all
people pay each month to the phone company not to put their
name in the book.
So now in this system no one's name is in the book but yet
they want us to pay from now on to do so. That just doesn't
make any sense at all. They are trying to create a business
where no business is needed at all. Thank you, Barbara.
Mr. Bass. The gentleman yields back.
Mr. Wynn.
Mr. Wynn. Thank you, Mr. Chairman. Good to see you,
Senator. Just a couple of questions. The industry has made
certain representations, obviously, to all of us. I think it is
predicated based on those representations. Is there any example
that industry has, in fact, sold wireless numbers or list the
wireless numbers?
Senator Boxer. They are just about to get their directory,
Mr. Wynn, as you will find out. They have just hired a company
to put it together. They don't have the directory as yet. They
are just about to have it.
Mr. Wynn. But based on the information you gave us in the
fine print, they actually do have all of those numbers and if
it were lawful to sell those numbers, and I presume it would
be, is there any evidence that they have sold the existing
numbers that they have pursuant to----
Senator Boxer. Well, you would have to ask them that.
Mr. Wynn. Okay. All right.
Senator Boxer. Obviously, you wouldn't put something in a
contract if you didn't have an intention to do it. It says
clearly you consent.
Mr. Wynn. No, I got that part. I was just concerned if
there was any anecdotal evidence because I am a big proponent
of privacy.
Senator Boxer. Good. Good.
Mr. Wynn. I strongly pushed for the Do Not Call list. I
just wanted to find out if there was any egregious anecdotes.
Also, I have a 10-year-old daughter so I am very sensitive to
the point that you made. If, in fact, this is an opt-in system,
as has been represented, would that address your concerns?
Because as the parent of a young daughter, my preference would
be to not opt-in. If I had that option without any cost, do you
believe that would solve the potential stalking problem?
Senator Boxer. That is the point of the legislation. This
is what they will tell you. They will tell you what you want to
hear today. They have changed on this constantly which is
wonderful they are changing. The point is we are here to
legislate for the long run and now you have certain people who
obviously hear us and they are listening and they are saying
they are going to do it all this way. But if you don't put it
into legislation, it could be all fine.
Yes, I agree. That is why we say opt-in, protect your kids
and all that is fine. That is what we are doing. We are not
stopping the directory. We are just saying this is the way it
ought to be. They say they are going to do exactly what we want
but yet they oppose the legislation on philosophical grounds
that they don't want to be ``regulated.'' But they say they are
going to do exactly what we have asked today.
A few months ago that wasn't what they said. What are they
going to want to do a year from now? I think we need to get
ahead of this. I think what we are doing again is very clear.
If the industry supports what we are doing, why not just put it
into law so in the future you may have an unscrupulous company
come forward and do something and start charging people. This
idea of all you have to do is switch to another carrier isn't
as easy as it sounds. Have you ever tried to switch carriers?
It isn't as easy as it sounds. It cost money. It takes time.
Mr. Wynn. Thank you.
Mr. Bass. The gentleman yields back.
Mr. Stearns.
Mr. Stearns. Thank you. Senator Boxer, let me also welcome
you here.
Senator Boxer. Thank you.
Mr. Stearns. I served with you when you were in the House.
You mentioned your 13-year-old daughter.
Senator Boxer. No, no, no, no, no. I don't have a 13-year-
old daughter.
Mr. Stearns. You mentioned a 13-year-old.
Senator Boxer. I said imagine your 13-year-old. It was kind
of a rhetorical put yourself in the position.
Mr. Stearns. Right. I have a 13-year-old daughter.
Senator Boxer. I actually have a 9-year-old grandson.
Mr. Stearns. But isn't it true that no one can sign these
consent contracts unless you are 18 and over.
Senator Boxer. Exactly right. But they print it anyway.
Mr. Stearns. The people that have been mentioned here they
really can't sign these contracts.
Senator Boxer. Well, the parent signs it for them.
Mr. Stearns. So the parent's name would be on the contract
and not the 13-year-old or the 9-year-old. But just from the
standpoint of industry, couldn't they take this----
Senator Boxer. Sir, let me just explain. If you are a
stalker you know that there is a kid and who the parents are so
if you see a number of phone lines listed in the parent's name,
all you have to do is call those and you will get the kid at
one point.
Mr. Stearns. Okay. Is it possible that this consent
agreement, that the wireless companies could just change it
itself without--I am just talking now. Instead of big Federal
legislation couldn't they just change this consent agreement
and do some kind of opt-in, opt-out procedures and all do it
there? Is that something----
Senator Boxer. That is the whole point. They can do
anything they want. They can do anything they want right now.
Mr. Stearns. So wouldn't you also suggest that--let us say
this bill does not pass in this Congress. I know it has passed
the Senate but----
Senator Boxer. No, it has not. It has passed the Commerce
Committee.
Mr. Stearns. Okay.
Senator Boxer. In a bipartisan vote.
Mr. Stearns. Well, let us say it doesn't pass. Wouldn't
your recommendation be also that maybe these companies should
actually just change the agreement and that would solve the
whole problem?
Senator Boxer. Of course I want them to change the
agreement. Of course. That is the point of the legislation.
There should be a national standard. Verizon doesn't want
anything to do with the directory whatsoever. That is their
opinion.
Mr. Stearns. Each company would be different and you want--
--
Senator Boxer. Each company would be different. I think you
should have a standard so that everyone knows that they are
protected. Just simple. Instead of Verizon says, ``We won't
even allow anyone to be in the directory.'' Now, some people
might flock to Verizon for that reason but others may not know.
This just seems like such a simple thing.
Mr. Stearns. Wouldn't that force all the companies to have
a national standard because they wouldn't want to lose business
so they----
Senator Boxer. I don't think so. There is no national
standard today.
Mr. Stearns. Okay.
Senator Boxer. No. There are all kinds of different
standards and Verizon was really chastising the other
companies, ``Stay away from this. It is really a bad idea.''
The rest of them--most of them are going forward with this.
Mr. Stearns. Thank you.
Senator Boxer. It is a mess out there, folks. That is the
truth.
Mr. Bass. Thank you, Mr. Stearns.
Further questions? Seeing none, I would like to thank you,
Senator Boxer for your testimony.
Senator Boxer. I thank you and it is nice to be here with
my--I don't want to say old colleagues and friends but my
former colleagues and current friends. Thank you very much.
Mr. Bass. You are very welcome.
The Chair will now introduce the second panel. The Chair
will hear from the Honorable Steve Largent who is the President
Chief Executive Officer of the Cellular Telecommunications and
Internet Association; Mr. W. Lee Hammond, Vice President and
Member of AARP; Mr. Patrick M. Cox, Chief Executive Officer of
Qsent, Inc.; Mr. Sunny K. Ahn, Chief Executive Officer of
Context Connect, Inc.
The Chair will recognize Congressman Largent for an opening
statement.
STATEMENTS OF HON. STEVE LARGENT, PRESIDENT AND CEO, CELLULAR
TELECOMMUNICATIONS AND INTERNET ASSOCIATION; W. LEE HAMMOND,
VICE PRESIDENT AND MEMBER, AARP BOARD OF DIRECTORS; PATRICK M.
COX, CHIEF EXECUTIVE OFFICER, QSENT, INC.; AND SUNNY K. AHN,
CHIEF EXECUTIVE OFFICER, CONTEXT CONNECT, INC.
Mr. Largent. When I left Congress in 2002 the question I
got asked often was, ``Do you miss being in Congress?'' And my
answer was typically, ``Not at all but I do miss being around
my friends.'' So it is great to have the opportunity to see a
lot of old friends and colleagues once again.
I have always been told that a picture is worth 1,000 words
so I brought a picture to hopefully help explain in the most
simple terms exactly what we are trying to propose and the
problems that we have with the direction that Congress seems to
be taking.
We have basically devised two different scenarios, what the
world looks like today and what we are trying to propose the
world look like tomorrow.
Let me just say, first of all, that we know according to
surveys about 90 percent of the people want to be like Mark
over here who is on this island. Mark wants his number unlisted
and you don't have to do a thing in today's world to keep your
number unlisted if you are a cell phone customer.
Congressman Pitts mentioned he doesn't want his phone
number listed. I don't want my number listed. You don't have to
do anything in today's world and you are really not threatened.
I mean, I would assume that most people don't feel threatened
as the world is today and that is a good thing.
However, John's Plumbing Company, he wants to list his
wireless number. He doesn't want to have a landline number
anymore. He can't afford to pay an assistant. He carries a cell
phone on his hip. It is a one-man operation, or two people
perhaps, and he wants to save some money. In fact, in today's
world you can actually port your old landline number to your
wireless device so that you don't even have to change your
current listing in the yellow pages. But John wants to be able
to be found and wants his wireless number to be able to be
found on a Directory Assistance, a 411 number.
He goes to his wireless company and in today's world
wireless companies can't list their numbers which is why we are
trying to introduce this service. He goes to his wireless
company and no, he can't list it. He goes to his wireline
company.
He happened to be smart enough to then try instead of going
to his wireless company to go to his wireland company and in
some instances in some places in this country today you can
actually list your wireless number with the wireline company.
We know there are approximately 5 million current wireless
customers who list their number.
I mentioned before we knew that 90 percent of the people
according to surveys that we have done say, ``We don't want our
number listed.'' That means that 10 percent do. Ten percent of
our customers have said, ``We would like to have our number
listed.'' Well, in today's world, you know, in the political
world you operate with 51 percent, right? But not in the
competitive wireless industry.
Ten percent of our customers is 17 million people so 17
million people, primarily small business people, what to have
their number listed. We listen to those customers so in today's
world there are 5 million of those people currently that are
paying a monthly fee to list their number with a 411 service.
If you happen to be in an area of the country where your
wireline company won't list your number, that is a no. Perhaps
you can list it on the Internet directory but that doesn't
necessarily connect with a 411 directory so you really don't
accomplish a lot.
Well, this is the world as it exist today. What are we
trying to do that is creating so much controversy? All we are
trying to do is add this line right here giving a wireless
company the opportunity to say yes to 10 percent of their
customers, 17 million people like John's Plumbing Company, that
are asking to list their number.
This doesn't have anything to do with people like many of
us who don't want your number listed. You are still over here
on this proposed world. You are still over here on this island.
You don't have to do a thing to keep your privacy protected in
the world that we are proposing. You can stay over there as
Mark is on the island.
But now John's Plumbing Company goes to this wireless
company and says, ``Can I list my number?'' Well, even in this
competitive world in the proposed world there are some wireless
companies who say, ``No, you can't list your number with our
service.'' Some customers will say, ``Thank goodness. I want to
be with you because I can't list my number. I can't choose to
list my number with your company. That is a good thing. I am
going to join you.''
But we want to create a world where they can go to their
wireless company and some wireless companies can say, ``Yes, if
you join our company you can list your number with a 411
service,'' which you can't do today. And then you go into--then
their number, which they have opted-in, they want to have this
service. Now it can be listed.
And a couple of things. John's Plumbing Company has to
proactively opt-in. We don't charge him to opt-in. In fact,
Mark, who is opting-out in this scenario, we don't charge him
for opting-out. That is also a free service. This is the
proposal that we have.
What I would like to do in just the 2 or 3 minutes I have
left is respond to some really specific questions. No. 1, will
carriers charge to opt-in or opt-out? The answer is no. This
committee asked for letters from all of our companies that are
participating. You got letters from the CEOs of these companies
and said absolutely not, not to opt-in and not to opt-out.
Will there be a printed directory of wireless numbers? The
answer is no. There is no printed directory unlike landline
directories. What about carrier contracts that say they can
list? It was mentioned most carriers had boiler plate language
that gave them permission over the last 10 or 15 years to
create this directory and list those numbers and you had to
sign that contract if you wanted to get their service.
The question was raised what is going to prevent companies
from changing their mind in the future? Let me just tell you,
all you can look at is the history. The carriers had
contractual language that allowed them to do this for the last
15 years and they have not done it.
Why? Because they are more concerned about their customer's
privacy then Congress is. They know if they start listing
numbers their customers are going to flee to somebody else's
company that doesn't do it. That is the pressure that these
companies face that is a greater pressure than legislation, and
that is the competitive industry that creates winners and
losers.
Mr. Bass. Steve, I hate to cut you off.
Mr. Largent. Let me just finish really quickly. Why now are
we doing this? Because of local number portability. You can
take your landline and carry it to a wireless service.
Children at risk. I would just, again, remind you you can't
sign a contract until you are 18 years old. I would mention the
fact that there are 200,000 calls to 911 over wireless phones
today. Wireless saves lives. It doesn't put children at risk.
It makes children safer. I look forward to responding to your
questions.
Thank you, Mr. Chairman.
[The prepared statement of Hon. Steve Largent follows:]
Prepared Statement of Hon. Steve Largent, President and CEO, Cellular
Telecommunications
Chairman Upton, Ranking Member Markey and members of the
Subcommittee, thank you for your invitation to testify this morning
regarding, ``An Examination of Wireless Directory Assistance Policies
and Programs.'' I welcome the chance to provide CTIA's views on this
issue, and specifically, the development of a wireless 411 service.
Let me preface my remarks by acknowledging the legislation that
Congressmen Pitts and Markey have put forward, H.R. 3558, and their
well-intentioned efforts. However, I sincerely believe that this bill
is not needed and does have unintended consequences. 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
33 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 not being viewed as 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's latest report on competition in the wireless industry. And
wireless customers are now using their phones for a multitude of new
purposes--to take pictures, play games and music, and to exchange more
than two billion text messages each month.
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% of small businesses, and 25% 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 in the wireline phone directory 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 H.R. 3558 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 this
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 has been
exemplary, as the wireless industry has sought 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 any 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 voicemail, caller ID, and 3-way
calling are all competitive responses undertaken 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 this
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 H.R. 3558 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.
Mr. Bass. Thank you, Congressman Largent.
Mr. Hammond.
STATEMENT OF W. LEE HAMMOND
Mr. Hammond. Chairman Barton and members of the committee,
my name is Lee Hammond and I am a member of AARP's Board of
Directors. On behalf of AARP and its 35 million members, thank
you for inviting us here this morning to testify on H.R. 3558,
the ``Wireless 411 Privacy Act,`` introduced by Representatives
Pitts and Markey.
AARP supports this legislation because it will maintain
consumer privacy by giving cell phone owners a choice as to
whether their cell phone number is included in a wireless
directory, and will protect consumer pocketbooks by shielding
them against charges for keeping it private.
The number of cellular or wireless telephone subscribers in
the U.S. has grown substantially over the past decade,
increasing from roughly 16 million in 1994 to 97 million in
2000, and to more than 160 million today. Many of these
subscribers are older Americans. In fact, consumers age 50 to
64 are almost as likely as those age 18 to 49 to have cell
phones. While consumers age 65 and older are somewhat less
likely to have cell phones, cell phones are of growing
importance to this age group as well.
In fact, cell phone users age 65 and older are most likely
to say that security in case of an emergency is the main reason
they have a cell phone. In contrast, younger cell phone users
are most likely to list convenience as the chief reason they
have a cell phone.
Privacy protection is a critical issue for cell phone users
of all ages. 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, which
surveyed wireless telephone users age 18 and older, confirms
that cell phone owners place a high value on the privacy of
their cell phone numbers.
As part of this survey, we asked cell phone subscribers
whether they thought it was good or bad that there is currently
no way for another individual to get their wireless phone
number unless the respondent chooses to give it to them. Nine
out of ten wireless phone owners of all ages said they thought
this was a good thing. The consensus on this point is
unequivocal.
We asked cell phone owners whether they would want to have
their wireless phone number included in a Directory Assistance
Data base so that others could locate their number. Only one in
ten wireless phone owners age 18-49 indicated that they would
want to be included in such a data base.
Far fewer of those age 50-64--6 percent--indicated that
they would want to be included in a wireless directory, and
among those age 65 and older, just 1 in 20--5 percent--said
that they would want to be included in a Directory Assistance
Data base. The consensus on this point is also clear and
unambiguous.
Finally, we asked wireless phone owners to assume that a
cell phone directory would in fact be compiled and then
requested that they choose one of two options as the best
method for creating a directory, opt-in and opt-out.
Respondents of all age groups overwhelmingly chose opt-in.
They indicated that a wireless directory should only include
the cell phone numbers of those wireless users who elect to
participate. In fact, only about 6 percent of all cell phone
owners selected the opt-out method as described in option #1.
On this point as well, the consensus is clear cut and
unmistakable.
This survey underscores the need for the bipartisan
legislation, H.R. 3558 and S. 1963, introduced by
Representatives Joseph Pitts (R-PA) and Edward Markey (D-MA) in
the House and Senators Arlen Specter (R-PA) and Barbara Boxer
(D-CA) in the U.S. Senate. AARP supports these bills and
believes that consumers deserve the right to maintain the
maximum amount of control over the disclosure of their wireless
phone numbers.
In this regard, we are not convinced that wireless
Directory Assistance can be managed in a manner that
effectively safeguards customer privacy unless Congress creates
legally enforceable rights to ensure that this occurs.
Some critics of H.R. 3558 and S. 1963 contend that these
bills are unnecessary in a competitive wireless industry and
make the point that most Americans live in a market served by
three or more wireless providers. They argue that with
competition in the marketplace will enable dissatisfied
customers to simply take their business elsewhere.
One problem with this line of reasoning, however, is that
many cell phone subscribers would have to pay a severe penalty
to take advantage of other choices in their service area. In
effect, they are trapped by long-term contracts. They include
very high fees, $150, $175 or more for early termination.
The development of a wireless directory without sensible
and effective privacy safeguards is not a risk worth taking.
Congress should enact industry-wide privacy protections for
cell phone subscribers now. Thank you.
[The prepared statement of W. Lee Hammond follows:]
Prepared Statement of W. Lee Hammond, Member, AARP Board of Directors
Chairman Barton and Members of the Committee: My name is W. Lee
Hammond and I am a member of AARP's Board of Directors. On behalf of
AARP and its 35 million members, thank you for inviting us here this
morning to testify on H.R. 3558, the ``Wireless 411 Privacy Act,''
introduced by Representatives Pitts and Markey. AARP supports this
legislation because it will maintain consumer privacy by giving cell
phone owners a choice as to whether their cell phone number is included
in a wireless directory, and will protect consumer pocketbooks by
shielding them against charges for keeping it private.
The number of cellular or wireless telephone subscribers in the
U.S. has grown substantially over the past decade, increasing from
roughly 16 million in 1994 to 97 million in 2000, and to more than 160
million today. Many of these subscribers are older Americans. In fact,
consumers age 50 to 64 are almost as likely as those age 18 to 49 to
have cell phones. While consumers age 65 and older are somewhat less
likely to have cell phones, cell phones are of growing importance to
this age group as well. In fact, cell phone users age 65 and older are
most likely to say that security in case of an emergency is the main
reason they have a cell phone. In contrast, younger cell phone users
are most likely to list convenience as the chief reason they have a
cell phone.
Privacy protection is a critical issue for cell phone users of all
ages. 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, which surveyed
wireless telephone users age 18 and older, confirms that cell phone
owners place a high value on the privacy of their cell phone numbers.
As part of this survey, we asked cell phone subscribers whether
they thought it was good or bad that there is currently no way for
another individual to get their wireless phone number unless the
respondent chooses to give it to them. Nine out of ten wireless phone
owners of all ages said they thought this was a good thing. The
consensus on this point is unequivocal.
We asked cell phone owners whether they would want to have their
wireless phone number included in a directory assistance database so
that others could locate their number. Only one in ten wireless phone
owners age 18-49 indicated that they would want to be included in such
a database. Far fewer of those age 50-64 (six percent) indicated that
they would want to be included in a wireless directory, and among those
age 65 and older, just one in twenty (five percent) said that they
would want to be included in a directory assistance database. The
consensus on this point is also clear and unambiguous.
Finally, we asked wireless phone owners to assume that a cell phone
directory would in fact be compiled and then requested that they choose
one of two options as the best method for creating a directory. Option
#1 was to have the wireless providers add every cell phone number to
their directory and then give cell phone owners the ability to have
their number removed upon request. Option #2 was to add only those
phone numbers of wireless users who give their permission to do so.
Respondents of all age groups overwhelmingly indicated that a wireless
directory should only include the cell phone numbers of those wireless
users who elect to participate. In fact, only about 6 percent of all
cell phone owners selected the opt-out method as described in option
#1. On this point as well, the consensus is clear cut and unmistakable.
This survey underscores the need for the bipartisan legislation--
H.R. 3558/S. 1963--introduced by Representatives Joseph Pitts (R-PA)
and Edward Markey (D-MA) in the House and Senators Arlen Specter (R-PA)
and Barbara Boxer (D-CA) in the U.S. Senate. AARP supports these bills
and believes that consumers deserve the right to maintain the maximum
amount of control over the disclosure of their wireless phone numbers.
In this regard, we are not convinced that wireless directory
assistance can be managed in a manner that effectively safeguards
customer privacy unless Congress creates legally enforceable rights to
ensure that this occurs. Some critics of H.R. 3558 and S. 1963 contend
that these bills are unnecessary in a competitive wireless industry and
make the point that most Americans live in a market served by three or
more wireless providers. They argue that with competition in the
marketplace, customers will simply take their business to a wireless
provider who is willing to meet their needs.
Nevertheless, the existence of numerous competitors in the wireless
telephone market does not necessarily ensure that consumers can choose
among these competitors or freely switch providers. In fact, among all
wireless subscribers who responded to a 2003 AARP survey, just 33
percent have ever switched companies to get a cheaper rate. Even fewer
older respondents report that they have changed their wireless service
provider.
The rate of consumer switching in the wireless industry contrasts
dramatically with that of the long-distance telephone industry.
According to another AARP survey released in 2000, 62 percent of
consumers who made long-distance telephone calls said they had changed
their long-distance company to get a cheaper rate. One explanation for
the lack of customer turnover in the wireless industry is the fact that
most wireless telephone companies require their customers to sign long-
term contracts that include penalties of $175 or more for early
termination.
Some in the wireless industry contend that the low turnover or
``churn'' rates are the result of overall customer satisfaction.
However, AARP research suggests that the more consumers use their cell
phones, the less satisfied they are with their service. More
specifically, the heaviest cell phone users, who are generally in the
best position to assess the overall quality of their service, are less
likely to report being very satisfied with their service. When these
cell phone users were asked why they remain with their current provider
despite a low level of satisfaction, the most often-cited reason was
that they wanted to avoid paying an early termination fee.
The development of a wireless directory without sensible and
effective privacy safeguards is not a risk worth taking. The consensus
on this point is unequivocal. Congressional action is necessary. In
this regard, we appreciate the work of the sponsors of H.R. 3558 and
this Subcommittee for their leadership in crafting legislation that
ensures 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. We urge you 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 timelier.
Mr. Bass. Thank you, Mr. Hammond.
Mr. Cox.
STATEMENT OF PATRICK M. COX
Mr. Cox. Thank you, Mr. Chairman. Good afternoon. I am Pat
Cox. I am the CEO of Qsent. I would like to comment today on
the wireless 411 service being proposed and talk about some of
its affects on privacy and how the service will work as well.
Qsent has been selected by six of the largest wireless
carriers to aggregate and provide a secure dynamically
controlled privacy protected data base solution for voice-based
411 services today. The service will be designed to provide
privacy control and consumer choice or opt-in. Clearly all the
concerns I have heard today really are being absolutely
addressed by the industry.
We believe it is important that the offering be nationwide.
We believe it is important to make the offering not a mobile
directory per se but be put as part of the basic 411 service
infrastructure that exist today so when any user calls 411 they
can get access to wireless subscriber information when and only
when and if that wireless subscriber has decided they want to
include their information.
Those 10 percent, and some studies have indicated as high
as maybe 60, but those 10 percent of the current subscribers
today that want to be in this data base, want to be in the
solution, it is highly important for them. I happen to be one
of those folks could really take advantage of being included in
the directory. I understand most of you out there don't see the
value personally. I get it. I fully get it.
And because of that it would be a complete train wreck for
the industry to start a service offering with all of you in the
data base. Could you imagine the backlash? It is just not going
to happen. All these fears that are being talked about just
aren't realistic. They aren't realistic in terms of the
business and legal liability associated, let alone customer
goodwill and satisfaction.
We fundamentally believe there are four pieces here that
need to be met with clearly. That is, the right to choose, opt-
in. This will be an opt-in service. The second, the right to
change. Something I haven't heard mentioned here but this is a
major part to think about. If a consumer decides they are no
longer desiring to be in the data base, they can make a phone
call, go to the web, go to a store, and say, ``Take me out.''
That night they are out.
Show me another industry that has that kind of real-time
access to privacy control. This is an 80-year tradition in the
telephone industry to be able to provide real-time access and
control of your privacy. Not only that, with directories such
as this you can say, ``Don't include my address,'' or ``Don't
include my first name.'' A lot of folks put their husband's
name in but not their name if they are widowers or whatever it
might be.
There is a lot of control over how information is
displayed. Specifically, Qsent's job in this project is to make
sure that no lists are created so that the lists don't get in
the hands of telemarketers, lists don't go in the wrong place.
And also to label numbers as wireless because there are a lot
of great protections.
There are at least four laws that have been enacted by you
that protect the consumer's right to not be bothered by
telemarketers and be spammed to, but they have got to be marked
wireless.
The current directory today does not mark phones as
wireless. This proposed service does. It allows greater
protections than is being afforded currently.
The last piece, the right to security and the right to do
it without cost. Really important that there will no fees to be
in, no fees to be out. This is an industry standard
proposition.
I would say on the chart that the CTIA put up here is a
very important point. Wireline companies can and do take money,
$3 or $4 a month, from wireless subscribers today to be in a
directory. Such large landline companies as Verizon provide
this as an opportunity but companies like Sprint or T-Mobile
who don't have large landline operations can't do these types
of things.
Hopefully that can shed some light possibly on why it makes
sense for some carriers to play in an environment where they
can charge $3 or $4 a month to be listed in a directory and
other carriers don't want to because they don't have the
landline opportunity. They don't print phone books and don't
provide that.
I think it is really clear there is a lot of value, an
extreme amount of value in the 411 directory. Eighty percent of
landline participants opt-in to the directory. They are
included. Clear consumer need. It solves a big problem.
The specific problem I have in the last 30 seconds I want
to cover is clearly this is not a philosophical argument as to
why we don't want legislation. It is because simply we agree
upon privacy but it starts getting down to the fine print, just
like the contracts that were pointed out earlier, such as this
is a call-forwarding service only and defining how that works,
or blocking numbers. Those types of technological decisions and
technology choices will put companies like this gentleman's out
of business. It is going to have unintended consequences. It
restricts the ability for investment by the investment
community in value-added services, new products, new features,
and new benefits. I believe today it is very, very clear that
the services will be handled in an appropriate manner.
[The prepared statement of Patrick M. Cox follows:]
Prepared Statement of Patrick Cox, Chief Executive Officer, 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 6 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% 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 email 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% 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. 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.
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.
Mr. Bass. Thank you, Mr. Cox.
Mr. Ahn.
STATEMENT OR SUNNY K. AHN
Mr. Ahn. Thank you, Mr. Chairman, members of this
committee. I appreciate the opportunity to testify before you
today on the topic of Wireless Directory Assistance. My name is
Sunny Ahn and I am the CEO of Context Connect.
Over the past 4 years Context Connect has developed,
patented, and continues to improve upon an innovative set of
technologies that together provide a privacy-based platform for
DA services. Our technologies give consumers a portfolio of
choices in providing them not only with privacy, but with
control of their DA services as well.
We have worked with telecommunications carriers,
enterprises, and other service providers in the U.S., Europe,
and the Asia Pacific regions. As such, I would like to share
with you some of our thoughts and experiences to date.
Let me start by addressing the core issue of privacy and
how it relates to Directory Assistance directories. One of the
problems that I continue to see in our industry today is how we
use the word ``privacy'' without making the distinction between
privacy and control, which are two very different things and
are both important.
Privacy, in the context of Directory Assistance,
constitutes protecting consumers' personal information, in
particular not revealing one's phone number or name and address
information without their permission. Control, on the other
hand, is the means by which we manage our connectivity: that
is, determining how, when and who can contact us via a
directory service, whether one's personal information is kept
private or not.
There is technology today that addresses both the privacy
and the control aspects of Directory Assistance. For example,
subscribers can create directory listings that protect their
personal information.
Masking technology on the consumer's phone number is
available on two levels.
One, at the time of a Directory Assistance inquiry where
the call center agent does not reveal the phone number and the
second on a monthly billing record.
On the latter point, masking technologies that protect
consumer numbers from becoming public information are currently
in use and commonly accepted. For example, technology that
protects consumers' credit card or bank account numbers mask
all but 4 of the 16 digits on paper receipts, websites or other
places where the information might be captured. One caveat is
that there are regulatory, financial and integration challenges
that will certainly have an impact on whether this aspect of
masking can be reasonably accomplished and these should not be
overlooked.
Subscribers can also protect or mask their name and
physical address. This ``name and address'' information can be
protected by use of a domain-name service for mobile devices.
This concept is similar to the way individuals create e-mail
addresses or URLs for websites. Subscribers can choose how they
want to be listed, whether it is professional, personal or
private in nature, based on their relationships with people,
rather than having to use their names and physical addresses.
Technology allows individuals to create single or multiple
directory listings according to their own parameters about how
they want to be located.
For example, my business colleagues could dial 411 and
contact me using the listing ``Sunny at Context Connect.'' Or,
my friends could call me at ``Sunny at the Newburyport Tennis
Club.'' In both cases, the caller does not have access to
either my phone number or my ``name and address'' information
unless I decide to reveal it.
Technology also gives consumers control over how they want
to be connected. For example, consumers can choose how they
receive their Directory Assistance calls, either through a
directly connected voice call, a text message, or a call
completed through a third-party partner. We can also allow
individuals to accept, decline, or redirect calls to another
device such as a land-line phone, voice mail or even e-mail.
Some of these services can be provided where the subscriber
does not have to use their own minutes to receive a Wireless
Directory Assistance call. We can also provide choices as to
when people choose to be contacted via Directory Assistance,
say only before 5 p.m. on weekdays.
And last, we can not only provide consumers with choices
regarding who can reach them via a directory service, but we
can even allow them to revoke that capability at some point in
the future without their privacy ever being compromised. My
point here is to establish that technology is already available
that can ensure consumers privacy over their personal
information while providing them with options to control how
they want to be contacted if they elect to be included in a
Wireless Directory Assistance Service directory.
In addition, these technologies continue to evolve rapidly;
many of these were not even available when this legislation was
first proposed last November. In our experience working on
Directory Assistance services in the U.S. and around the globe,
there is no question that consumers are strongly demanding more
efficient ways to connect.
I would like to reference the latest study by the Pierz
Group that was conducted in August 2004. According to that
study, if wireless services were currently constructed with
consumer protections similar to the traditional Directory
Assistance fixed line services, only 11 percent of wireless
subscribers would participate by listing themselves in that
directory.
However, if a Wireless Directory Assistance Service
included even a basic level of privacy and control features,
participation would increase to over 50 percent. And, if
consumers were offered comprehensive privacy protections,
estimated participation would increase even further to over 60
percent.
These survey findings are very consistent with our own
experience in the U.K. and New Zealand where the majority of
mobile subscribers would participate with appropriate privacy
tools. Interestingly, in the UK, where 40 percent of fixed line
customers have chosen to not be included in the Directory
Assistance directory, nearly 50 percent of them would actually
come back into the directory if basic privacy and control tools
were given.
The key here is if marketed as a mobile directory service a
high penetration of subscribers would be needed in the
director. However, other niche directory services could exist
and succeed if marketed appropriately as we have seen in the UK
in other European countries.
Another proof point of the receptivity of the market to
offering a suite of privacy control options has to do with the
experiences of one of our customers who has successfully
implemented a DA service including wireless phone numbers. That
customer is focused on providing directory services to a large
vertical market most of who use mobile phones.
Mr. Bass. Mr. Ahn, can you wrap it up?
Mr. Ahn. Sure. Well, in conclusion, it is clear from the
market research conducted to date that there is a strong market
need and demand for Wireless Directory Assistance Services.
Annually, billions of calls are already placed in the U.S.
through existing directories. However there is no single
Directory Assistance service that is appropriate for everyone.
The key, therefore, is to construct these services in a way
that gives control to the consumer and that provides a viable
directory for all concerned. Thank you.
[The prepared statement of Sunny K. Ahn follows:]
Prepared Statement of Sunny K. Ahn, CEO, Context Connect
Thank you Mr. Chairman and Members of this Committee. I appreciate
the opportunity to testify before you today on the topic of Wireless
Directory Assistance. My name is Sunny Ahn and I am the CEO of Context
Connect, Inc.
Over the past four years Context Connect has developed, patented
and continues to improve upon an innovative set of technologies that
together provide a privacy-based platform for Directory Assistance
Services. Our technologies give consumers a portfolio of choices in
providing them not only with privacy, but with control of their
directory services as well. We have worked with telecommunications
carriers, enterprises, and other service providers in the United
States, Europe, and the Asia Pacific regions. As such, I would like to
share with you some of our thoughts and experiences to date.
privacy vs. control
Let me start by addressing the core issue of privacy and how it
relates to Directory Assistance directories. One of the problems that I
continue to see in our industry today is how we use the word
``privacy'' without making the distinction between privacy and control,
which are two very different things and are both important. Privacy, in
the context of directory assistance, constitutes protecting consumers'
personal information, in particular not revealing one's phone number or
``name and address'' information without their permission. Control, on
the other hand, is the means by which we manage our connectivity: that
is, determining how, when and who can contact us via a directory
service, whether one's personal information is kept private or not.
available privacy and control technologies
There is technology today that addresses both the privacy and the
control aspects of Directory Assistance. For example, subscribers can
create directory listings that protect their personal information. Such
technology enables a call to be placed through a Wireless Directory
Assistance Service without requiring or revealing the call recipient's
phone number.
Masking technology on the phone number is available on two levels:
one at the time of a Directory Assistance inquiry where the call center
agent does not reveal the phone number and the second on a monthly
billing record. On the latter point, masking technologies that protect
consumer numbers from becoming public information are currently in use
and commonly accepted. For example, technology that protects consumers'
credit card or bank account numbers mask all but four of the sixteen
digits on paper receipts, websites or other places where the
information might be captured. One caveat is that there are regulatory,
financial and integration challenges that will certainly have an impact
on whether this aspect of masking can be reasonably accomplished and
these should not be overlooked.
Subscribers can also protect or mask their name and physical
address. This ``name and address'' information can be protected by use
of a domain-name service for mobile devices. This concept is similar to
the way individuals create email addresses or URLs for websites.
Subscribers can choose how they want to be listed, whether it is
professional, personal or private in nature, based on their
relationships with people, rather than having to use their names and
physical addresses. Technology allows individuals to create single or
multiple directory listings according to their own parameters about how
they want to be located. For example, my business colleagues could dial
411 and contact me using the listing ``Sunny at Context Connect.'' Or,
my friends could call me at ``Sunny at the Newburyport Tennis Club.''
In both cases, the caller does not have access to either my phone
number or my ``name and address'' information unless I decide to reveal
it.
Technology also gives consumers control over how they want to be
connected. For example, consumers can choose how they receive their
Directory Assistance calls, either through a directly connected voice
call, a text message, or a call completed through a third-party
partner. We can also allow individuals to accept, decline, or redirect
calls to another device such as a land-line phone, voicemail or even
email. Some of these services can be provided where the subscriber does
not have to use their own minutes to receive a Wireless Directory
Assistance call. We can also provide choices as to when people choose
to be contacted via Directory Assistance, say only before 5pm on
weekdays. And lastly, we can not only provide consumers with choices
regarding who can reach them via a directory service, but we can even
allow them to revoke that capability at some point in the future
without their privacy ever being compromised.
My point here is to establish that technology is already available
that can ensure consumers privacy over their personal information while
providing them with options to control how they want to be contacted if
they elect to be included in a Wireless Directory Assistance Service
directory. In addition, these technologies continue to evolve rapidly;
many of these were not even available when this legislation was first
proposed last November.
In our experience working on Directory Assistance services in the
U.S. and around the globe, there is no question that consumers are
strongly demanding more efficient ways to connect. I would like to
reference the latest study by the Pierz Group that was conducted in
August 2004.
According to that study, if wireless services were currently
constructed with consumer protections similar to the traditional
Directory Assistance fixed line services, only 11% of wireless
subscribers would participate by listing themselves in that directory.
However, if a Wireless Directory Assistance Service included even a
basic level of privacy and control features, participation would
increase to over 50%. And, if consumers were offered comprehensive
privacy protections, estimated participation would increase even
further to over 60%.
These survey findings are very consistent with our own experience
in the U.K. and New Zealand where the majority of mobile subscribers
would participate with appropriate privacy tools. Interestingly, in the
UK, where 40% of fixed line customers have chosen to not be included in
the Directory Assistance directory, nearly 50% of them would actually
come back into the directory if basic privacy and control tools were
given.
Another proof point of the receptivity of the market to offering a
suite of privacy and control options has to do with the experience of
one of our customers who has already successfully implemented a
Directory Assistance service that includes wireless phone numbers. That
customer is focused on providing directory services to a large vertical
market segment, most of which use mobile phones. Because they were able
to mask the phone numbers and provide additional privacy and control
features, nearly 75% of all their prospects that have heard of the
service have opted to be included in the directory. While this service
provider is not restricted with regulatory and industry coordination
challenges, this further demonstrates that when marketed appropriately,
privacy and control tools can increase the participation within a
directory and ultimately improve the usefulness of that directory to
consumers.
conclusion
In conclusion, it is clear from the market research conducted to
date that there is a strong market need and demand for Wireless
Directory Assistance Services. Annually, billions of calls are already
placed in the U.S. through existing directories. However there is no
single Directory Assistance service that is appropriate for everyone.
The key, therefore, is to construct these services in a way that gives
control to the consumer and that provides a viable directory for all
concerned.
Subscribers have very legitimate and important privacy concerns.
Most of us sitting here in this room use a wireless phone. We recognize
that the continued confidentiality of personal information and control
on when, where and how each of us want to be connected to is a very
personal concern. Subscribers should and can have the ultimate decision
on what personal information goes into a directory, if any. Context
Connect and other companies have technologies that can address these
concerns thoughtfully, carefully and with flexibility. As the market
and these technologies continue to evolve, we need to allow flexibility
for industry participants to move quickly to meet and exceed the
demands of consumers who are increasingly knowledgeable and
sophisticated in their technology purchases.
Context Connect supports providing the most comprehensive privacy
and control features available, and also highly encourages innovation
and progress within our industry to ensure maximum customer
satisfaction.
Mr. Bass. Thank you.
The Chair recognizes himself for a round of questions.
Steve, what is wrong with just legislating your proposed scheme
there that you have?
Mr. Largent. Well, if you just look at the legislation that
came out of the Senate Commerce Committee, what has been
portrayed as a simple solution, a no-brainer, is really much
more complex than that. The fact is, Mr. Chairman, that this
industry is highly competitive. It is highly innovative. It
continues to offer new and better services.
One of the comments that was made is that it is hard to get
out of contracts. The fact is that there are many companies
that are offering prepaid phones where you don't have to have a
contract. They are offering service with no contractual
obligation.
It was also mentioned that this is a service that you have
to pay for incoming calls. Not true. Most companies are
offering plans where you don't have to pay for incoming calls.
That is also a non-issue. But it highlights the point that the
industry continues to evolve and offer new and better services.
What legislation like this does, it basically puts a
regulatory straightjacket on an innovative industry. It has the
potential of killing a company like Sunny Ahn, that you just
heard from on this very panel, to offer new and innovative
services through 411 service. And so that is part of it.
Another thing, again, going back to the Senate bill, I
mean, you talk about this should be a simple solution. It is
not. They put masking provisions in there so that you can't put
down the phone numbers that are now mandated on phone bills of
who you called or who called you. You want to say that you want
all those numbers masked that you are now mandated to put on
there if they happen to be customers who want to opt-out of 411
service.
Now you have really got to put together a data base of all
customers whether they opt-in or opt-out so you can figure out
who is in and who is out so that you can mask those numbers on
the phone bill of those people that are out. It becomes very
complex.
Mr. Bass. I guess I'll repeat it. Is there any problem
besides--your response was you need flexibility to provide
innovation. Is there any problem with legislating what you have
suggested as your current policy? What ways would you change
that would make it better?
Mr. Largent. There would be no problem--I would tell you
there is no problem whatsoever legislating what we are
proposing today. But I can't tell you what this might look like
without legislation as it continues to grow and move forward
and become robust and a richer experience for our consumers.
But I can tell you that if you legislate our proposal
today, you freeze us in place and you lock out technology
companies like Sunny's. We have seen that time and time again.
It has an incredible chilling affect on our ability to offer
new and more innovative services in this industry which we have
proven time and time again to do.
Mr. Bass. Mr. Ahn, would legislating Mr. Largent's proposal
there put you out of business?
Mr. Ahn. Well, there are obviously a number of service
providers that are out there. In fact, I would characterize
them as certainly a main focus of our business, the carriers,
but there are service providers that are out there. They are
just dying to get into the directory space because of
legislation, you know, whether it is available or not. But I
think we do have opportunities throughout but certainly
carriers are one of our key constituents in terms of focus.
Mr. Bass. Would enactment of legislation along the lines of
Mr. Largent's proposed scheme put you out of business?
Mr. Ahn. I think for the carriers with an industry-based
solution that would be a difficult thing for us to follow,
correct.
Mr. Bass. Mr. Largent, you said that contracts are
different. That is true. Is it not true, though, that most
wireless subscribers lock themselves into a fixed term because
they don't want to pay as much cash for the handset or whatever
other benefit is offered. Under your proposal there how would--
if you have a 2-year contract and you are paying a low price
for the handset or whatever other benefit, free calling and so
forth, how could you get out of a contract without significant
expense and bother if you found out that the wireless company
was going to list your name in a directory?
Mr. Largent. Well, the voluntary consumer code that all of
our major companies have participated in actually allow for
customers to get out of their contract if the carrier changes
the terms of those contracts.
Mr. Bass. But the terms currently say you can list their
names without their consent, many of these contracts. Is that
not correct?
Mr. Largent. That is correct.
Mr. Bass. They would have their name listed. What
percentage of the wireless contracts do you think have that
phraseology in it?
Mr. Largent. You know, I'm not sure what the percentage
would be, Mr. Chairman. But, again, we're talking about the
world that we are proposing and the world as we know it today.
The fact is that the proposed world that we are debating today
is about a total opt-in service.
Mr. Bass. One question is how easy would it be for
customers to opt-out under your proposal? Would it take time if
they wanted to?
Mr. Largent. The gentleman that handles the technology side
of that, it would be almost instantaneous.
Mr. Bass. Okay.
Mr. Largent. Can I say one other thing, Mr. Chairman? You
asked what is the problem. Our proposal actually goes further
than the bill that is under consideration meaning that the bill
language today says if you are a new customer, you have to opt-
in. If you are an existing customer, you have to opt-out. We
are saying it is total opt-in.
If you are a new customer or if you are an existing
customer, we are going to ask you to opt-in into this service
or else you are automatically opted-out. Just the opposite of
the current landline situation where you are automatically in
unless you proactively opt-out and have to pay for it.
Mr. Bass. What is your observation about the possibility
that companies might change this contract language involving
the use of their name for directory if no law is passed? If we
past no legislation, what is your best bet as to whether or not
the wireless companies would be willing to take that language
out?
Mr. Largent. That is an excellent question. In fact, that
was one that was posed by Chairman Barton and Chairman Upton,
as well as Chairman McCain in the Senate. They polled our CEOs
and asked that very question, ``What is your intent on this
language and on the opt-in provision that you are proposing?''
They got responses from the participating carriers. Again,
Verizon is not participating. But of the participating carriers
the other six major carriers in the country both responded to
the letter and they all said that they would impose opt-in.
Now, you can say there are 170 different carriers. That is
true but the carriers that we are talking about represent more
than 90 percent of all the cellular customers in the country
today.
Mr. Bass. I have here responses from the companies that
without objection I would like to include them in the record. I
have no further questions.
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Mr. Bass. Mr. Stupak.
Mr. Stupak. Thank you, Mr. Chairman. Along that same line,
Mr. Largent, is the industry changing the language in these
contracts?
Mr. Largent. Some companies have already done that so all
of the new contracts that are out there are already changed. I
think every company is in the process of changing those
contracts as we speak.
Mr. Stupak. How long will the industry be committed to the
opt-in approach for these cell users?
Mr. Largent. As long as our customers tell us that is the
way it needs to be. Obviously you have heard all the numbers
today. The overwhelming majority of our customers insist upon
having an opt-in provision in this 411 service.
Mr. Stupak. You said that this legislation would probably
stifle technology and innovation. Could you just elaborate on
that a little bit more? Being a representative of the industry
how do you see it stifling technology and innovation? I
understand the competition part.
Mr. Largent. Sure. Well, the one thing we haven't spoken
about is the fact that not only is this legislation being
proposed at the Federal level but there are several states, in
fact, California being one of them, that has already passed
legislation regulating 411 service in the State of California
that is even more burdensome than the bill that is under
consideration here.
In fact, a number of our carriers are questioning whether
they want to continue down this path even though they feel the
demand from their customers, even 10 percent of their
customers, to do this the regulatory burden becomes so great
that they are saying it may not be worth it to go down this
path. If that is, in fact, the case, then you not only put out
a company--you harm a company like Sunny's but also Pat's.
Mr. Stupak. The 411 proposal that your industry has, would
every wireless company be required to be part of it? I realize
Verizon is not in support of it but, I mean, you can't say to
your members, ``If we do 411, you are required to come into
this directory?''
Mr. Largent. No. In fact, again, the competitive industry
not all the companies are participating. Verizon is not. Six of
the other seven largest carriers who, again, if you add Verizon
who you would say is opting-out, they represent about 93
percent of the wireless customers in the country today. There
are a lot of tier two and tier three carriers. Maybe they will
be a part of this and maybe they won't. I can't say.
Mr. Stupak. I have no other questions, Mr. Chairman. Thank
you.
Mr. Bass. The gentleman yields back. The Chair would like
to welcome the distinguished chairman of the committee, Mr.
Barton, and recognize him for 10 minutes for questions.
Chairman Barton. Mr. Chairman, I have no questions. I
apologize for being a little bit late and missing Senator
Boxer. I did want to come and at least welcome these fine
fellows to our committee, especially former Congressman Steve
Largent. We are glad to have you here.
Mr. Largent. Thank you.
Mr. Bass. The gentleman yields back.
Mr. Walden.
Mr. Walden. Thank you very much, Mr. Chairman. I just want
to make sure I have this straight. If I am a cell phone users,
which I am, and under the proposed system the only way my
number could be made available in a directory service is if I
say it can be made available. Is that accurate under your
proposal, Mr. Largent?
Mr. Largent. Yes, sir.
Mr. Walden. And so everybody out there with cell phones
today would have the ability under your proposal to not be
listed if they didn't want to be?
Mr. Largent. That is right.
Mr. Walden. Now, what happens if I--one of the issues I
have, of course, speaking of cell phones, is the way they ring
in the middle of committee meetings, but it is okay in this
case. The issue is when people call me, I get billed. Don't it?
Mr. Largent. Not necessarily.
Mr. Walden. Could you elaborate more on that?
Mr. Largent. Sure. Again, because this is such a
competitive robust industry, carriers are responding to their
customers' concerns. In fact, the average cost, the monthly
bill of a wireless customer has gone down the last 10 years,
not up. We offer more services and we offer them for free in
many cases like this service, free service. You don't pay to
opt-in and you don't pay to opt-out. You don't pay for caller
ID. You don't pay for a number of things that are offered over
your wireless service. What was your question again?
Mr. Walden. I don't want to be charged----
Mr. Largent. Oh, yeah. So a lot of carriers have plans--
have devised plans where you don't have to pay for incoming
calls so it is not a given that you pay for incoming calls.
Mr. Walden. What percent of your carriers have those sorts
of plans? Do you know?
Mr. Largent. My guess is the majority, the overwhelming
majority of our major carriers who, again, represent 93 percent
of all customers in the country have a plan, or even multiple
plans, that do not charge for incoming calls.
Mr. Walden. All right. Or at least in the first minute or
so.
Mr. Cox, do you want to elaborate on that?
Mr. Cox. Yeah. I believe most carriers don't charge for the
first minute of incoming calls in case it is a wrong number or
a misdial.
Mr. Walden. Okay. All right. So what are the privacy issues
then if this is how you are proposing this? Mr. Hammond, do you
want to tell me? Some of the issues you raised in your
testimony seem to be addressed by this proposal. Don't they?
Mr. Hammond. Some of them are.
Mr. Walden. What remains?
Mr. Hammond. Mr. Walden, I think it is more of a concern of
making sure that they continue to be addressed.
Mr. Walden. All right.
Mr. Hammond. We have heard the number of changes that have
taken place over the past several months and there is nothing
to indicate that those changes couldn't continue to take place
in the future. Certainly there will be technological advances
but I think it is appropriate to set a level if privacy
expectation by allowing a consumer to determine whether they
want to be in or out of the Director Assistance Program.
Mr. Walden. Mr. Largent, do you want to comment on that? I
mean, what would be wrong with us saying at a minimum every
consumer should have the right to opt-in if that is what you
are proposing to do?
Mr. Largent. Again, let me offer a personal view and that
is that it seems to me that Congress has a lot more important
things to do in instances where there has been demonstrated
consumer harm. This is a service that is still on the
chalkboard. Again, I think this is an industry that continues
to change.
Mr. Walden. So is it your view that this legislation is
chasing a problem that doesn't exist and probably won't exist?
Mr. Largent. Well, the problem not only doesn't exist. The
service doesn't exist yet. Again, it is a very dynamic industry
that continues to change. In fact, I would mention talk about a
dynamic industry that continuously evolves and changes. I mean,
it is exciting to me to be able to say or learn that the AARP
is going to get into the wireless business offering services to
their own members. I think that is a wonderful thing. Again, it
just shows you how diverse the industry is.
Mr. Walden. And, Mr. Cox, could you elaborate a little bit
more on the issue, I guess, in this case is it plumbing? Is it
John's Plumbing Company, Mr. Largent? In my case it was a
contractor. John Plumbing. That is a good one. In my case it
was a contractor whose whole business was on his cell phone.
Now, what happens today and what would happen under this
system?
Mr. Cox. One of the clear advantages to not having
legislation, the only no-brainer here is to not make a law
here. It is not so much whether people should opt-in or opt-
out. It is clear, everybody, agrees it is an opt-in. The data
base starts at zero. That is clear and agreed to by everybody.
The question comes in how do you do it. For example,
California says it requires a wet ink signature on a piece of
tree paper. That would be like asking Amazon.com to have a wet
signature on a tree piece of paper before they could ship a
book. It breaks the business model. For phones today the AARP
won't be setting up retail locations to have their consumers
leave their home and drive down to sign forms. They want to
conduct business over the phone, over the web.
The devil is always in the details. It is the structure of
how these things, these protections, would be created that kill
the innovation, that kill the prospect of service and end up
not servicing the customer. It makes it harder for people to be
able to get the control and access they deserve. It is a huge
problem. That being said, one of the proposed pieces also is
that it becomes now illegal for John's Plumbing to be listed in
the phone book when John needs very much----
Mr. Walden. Under the legislation.
Mr. Cox. Under the proposed legislation in Section D it
would now become illegal where it is now legal if John chooses.
He has to pay for it but it becomes illegal for him to be in
the phone book. That phone book listing for him is key to his
success.
Not only that, it allows him to pay literally thousands of
dollars into the telephone company in the form of advertising
which subsidizes and creates lower consumer rates on basic
telephone service. Businesses pay more for advertising .
Businesses pay more for phone bills. If you take away a
business' opportunity to advertise and be represented in a
directory, it kills the rate structure we have today.
Mr. Walden. Thank you. Thank you, Mr. Chairman, for letting
the witness complete his answer.
Mr. Bass. The gentleman's time has expired. Mr. Shimkus.
Mr. Shimkus. Thank you, Mr. Chairman. This is an
interesting hearing and I am glad I spent time and stayed
around. Usually we address problems after they are happening.
Here we are making an assumption that there is going to be a
problem. I think the debate is really because, Steve, there are
groups that don't trust your industry and they think they are
going to rip off the public and sell information.
That is obviously a very political challenging hurdle to
overcome because it has mass appeal. Really the question is is
there an opt-out--I mean an opt-in? Are people going to be
forced to pay in? I think if those things get addressed, then
it is not that difficult. I would encourage this to--I grabbed
it from your staff, a smaller portion of your little diagram. I
think it is very helpful in synthesizing this whole debate.
As you know, I worked with--I helped draft and pass E911 as
a national cellular number. Now we are doing Enhanced 911. My
question is also the cellular industry is keeping data bases.
They have to keep data bases for the system to operate.
I was on the floor last night talking about the 911
Commission Report and talking about the opportunity to call
forward based upon a terrorist attack, weaponized anthrax,
dirty bomb. The ability through your industry and the industry
of the cellular phone companies to be able to say there is a
plume and you know the wind direction to be able to identify
and call forward on the cell phones to identify people to
disperse and actually which way to go because you don't want to
go down--you want to disperse but you don't want to keep going
downwind if there is a terrorist attack. There is a data base
but right now there is no ability based on current law to call
those numbers. Is that correct?
Mr. Largent. If I understand your question, there is no
central data base. Every carrier obviously has their customers'
information that is highly protected for obvious competitive
reasons.
Mr. Shimkus. So as far as the 911 Commission--I'm sorry to
go off topic but that is pretty relevant with our bill coming
up on the floor next week--how do we get there? The cellular
industry has been lifesaving and when we can pass Enhanced 911
we are going to hope to offer that to an amendment on the 911
Commission bill and hopefully get the support of my colleagues
and put that as part of the bill.
How do we get to that point where our first-line responders
or TTIC or all these other whoever, how do they get access? We
need to talk through how a cellular phone can be used in the
event of a catastrophic terrorist attack to inform folks. If
you folks here, you tech folks, and even the consumer advocates
because it will address issues of consumer privacy. I mean, you
have to call to warn people to get out of the way. There is a
data base that has numbers but have you gotten permission to
call that number.
Mr. Largent. If I could respond to that, two things. One,
you began your question by talking about there are some that
don't trust the industry. I would say that we are talking and
debating today about an issue that has not been created. There
has been no demonstrated harm. We are also talking about an
industry that has at least a 15-year track record of protecting
consumer privacy. I just wanted to make that statement.
Mr. Shimkus. If I may jump in, even with our Enhanced 911
bill you all supported the legislation that would keep us from
identifying locations so when you are driving down the
interstate you don't get a call saying, ``Pull off at exit 45
for your nearest McDonald's.'' That was part of that
legislation that we passed through the House. Through this
committee and on the floor of the House.
Mr. Largent. Not only that, this is an industry that also
worked assiduously with the Congress to make sure that wireless
numbers were not made available to telemarketers. It is a
Federal offense. Because of legislation that we helped promote
it is a Federal offense for telemarketers to call wireless
numbers. We have guarded our customers' privacy doggedly.
Mr. Shimkus. When you go back and do staffing, and really
the turnaround time is pretty quick. Like I said, we are going
to be addressing the 911 Commission Report next week. We are
going to offer the E911 as an amendment to the bill.
We are probably not going to be able to structure
legislation to address the national data base and how do you
use that to call. We need to start the tech folks and the
associations really need to address that because my experience
with the cellular industry it has been a lifesaving association
and time saves lives and the cellular industry has done that. I
appreciate that work.
Mr. Chairman, that ends my time and I yield back.
Mr. Bass. Mr. Gillmor. Mr. Gillmor waives.
Mr. Pitts.
Mr. Pitts. Thank you, Mr. Chairman.
Steve, the recent promises to make this directory
completely opt-in is from, did you say, 5 or 6 of the major
carriers? Is that correct?
Mr. Largent. All of the participating carriers.
Mr. Pitts. How many is that?
Mr. Largent. We have six of the seven largest carriers.
Mr. Pitts. Okay. What does that mean then for the remaining
180, tier two, tier three carriers that do not and are not
represented?
Mr. Largent. It means that they are not participating in
the Limited Liability Corporation that CTIA helped formulate of
the carriers who are participating, which means that if a
carrier is not participating in the LLC, then, again, their
customers are just like Verizon who have made--I mean, they are
the one large carrier that have made the decision not to offer
this service to their customer.
Mr. Pitts. I know Verizon has said that. Does that mean the
folks with those other carriers could be concerned that their
numbers and personal information including address could be in
a data base without them knowing it?
Mr. Largent. If a customer is with a carrier who is not
participating in this Limited Liability Corporation that has
been structured by the industry, then they aren't at any
greater risk after the service is introduced then they are
before because their personal data is held only by their
carrier of choice.
Mr. Pitts. What is the legal status of the existing service
agreements that contain legal authorization to list numbers in
a public directory?
Mr. Largent. Again, let's talk about the universe of
carriers who have elected to participate in offering this
service. Every one of the CEOs of those companies is in process
or has already restructured those contracts, and has sent a
letter to Congress stating that in those instances where they
have existing customers who have contracts that contain the
language that permit the carriers to do this without seeking
anymore permission, that those carriers will go back to those
existing customers and say, ``We are going to offer this new
service. Would you like to participate? Yes or no?''
Mr. Pitts. And how did they change the contracts?
Mr. Largent. Well, they have changed the contracts on a
going forward basis. In other words, any new customer who comes
in to their service, the contract now looks differently. It
does not contain that language and for the foreseeable future
that will be the case.
Mr. Pitts. But with existing contracts they are with a
letter saying they are not going to hold them to that privacy
section where they signed away their privacy rights. Is that
right?
Mr. Largent. They are saying, Congressman Pitts, if you
have a contract with Carrier X and Carrier X is participating
in this service and the contract that you have with Carrier X
says, ``Mr. Pitts, we can list your number if we want to,'' and
you sign that contract, if your contract looks like that,
Carrier X has said in a letter to Congress that for customers
like yourself they will proactively go to you and say, ``Mr.
Pitts, would you like to have your number listed in this
service?'' If your answer is no, then the world that you live
in today looks no different tomorrow after this has been
implemented.
Mr. Pitts. Now, can you tell me if a letter to a bunch of
politicians is going to hold up in a court of law? Are they
legally binding?
Mr. Largent. No, they are not. Clearly they are not.
Mr. Pitts. So what happens if they change their mind in a
couple of years?
Mr. Largent. Two things can happen. One is that customer
can go to another carrier who does not offer the service. The
second thing that could happen, and I hope this, in fact, is
the case, that Congressman Pitts will still be in Congress and
then you can actually come before Congress and say, ``We have
many instances, or an instance, of consumer harm and we need to
do this right now.'' You can pass legislation and you can do it
post haste.
Mr. Pitts. Is there any other way besides that that we can
ensure that the contracts won't change again in another 6
months? I mean, is the market place really free when consumers
are locked into 2-year contracts?
Mr. Largent. I would say there has never been a freer
market or more competitive market than there is in the wireless
industry. That is across telecommunications or any other
industry you want to look at. The answer to your question is
no. I cannot stand here and tell you today that there is no way
that the industry is ever going to move off of where we are
today because the one thing that you can say has been
consistent about the wireless industry is that it continues to
evolve. The evolvement of this industry has been better for
consumers, not worse. It has protected their interest better,
not worse. My expectation is that trend will continue.
Mr. Pitts. Now, will documentation be provided that proves
the industry will continue to pursue and opt-in for the
directory?
Mr. Largent. I guess I would ask what kind of documentation
would be satisfactory to you?
Mr. Pitts. Anything in writing.
Mr. Largent. Well, you have that in writing before you as
part of the record right now.
Mr. Pitts. You're talking about the letter. Is that
correct?
Mr. Largent. Yes, sir.
Mr. Pitts. Will carriers who choose not to participate at
the current time be subject to the promise that you have made
today if they decide to participate in the future?
Mr. Largent. Yes.
Mr. Bass. Let me interrupt you for a second, Mr. Pitts.
Your time has expired. However, Mr. Gillmor does not wish to be
recognized. Do you have further questions?
Mr. Pitts. I'll yield back.
Mr. Bass. Mr. Pitts yields back. Does anybody else wish to
ask any further questions of this panel? Seeing none, we thank
the panel for being here today and with that we will adjourn
this subcommittee hearing.
[Whereupon, at 11:40 a.m. the subcommittee hearing was
adjourned.]
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