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96–102PDF 2004

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/house

COMMITTEE ON ENERGY AND COMMERCE

JOE BARTON, Texas, Chairman

W.J. ‘‘BILLY’’ TAUZIN, Louisiana

RALPH M. HALL, Texas

MICHAEL BILIRAKIS, Florida

FRED UPTON, Michigan

CLIFF STEARNS, Florida

PAUL E. GILLMOR, Ohio

JAMES C. GREENWOOD, Pennsylvania

CHRISTOPHER COX, California

NATHAN DEAL, Georgia

RICHARD BURR, North Carolina

ED WHITFIELD, Kentucky

CHARLIE NORWOOD, Georgia

BARBARA CUBIN, Wyoming

JOHN SHIMKUS, Illinois

HEATHER WILSON, New Mexico

JOHN B. SHADEGG, Arizona

CHARLES W. ‘‘CHIP’’ PICKERING,

Mississippi, Vice Chairman

VITO FOSSELLA, New York

STEVE BUYER, Indiana

GEORGE RADANOVICH, California

CHARLES F. BASS, New Hampshire

JOSEPH R. PITTS, Pennsylvania

MARY BONO, California

GREG WALDEN, Oregon

LEE TERRY, Nebraska

MIKE FERGUSON, New Jersey

MIKE ROGERS, Michigan

DARRELL E. ISSA, California

C.L. ‘‘BUTCH’’ OTTER, Idaho

JOHN SULLIVAN, Oklahoma

JOHN D. DINGELL, Michigan

Ranking Member

HENRY A. WAXMAN, California

EDWARD J. MARKEY, Massachusetts

RICK BOUCHER, Virginia

EDOLPHUS TOWNS, New York

FRANK PALLONE, Jr., New Jersey

SHERROD BROWN, Ohio

BART GORDON, Tennessee

PETER DEUTSCH, Florida

BOBBY L. RUSH, Illinois

ANNA G. ESHOO, California

BART STUPAK, Michigan

ELIOT L. ENGEL, New York

ALBERT R. WYNN, Maryland

GENE GREEN, Texas

KAREN MCCARTHY, Missouri

TED STRICKLAND, Ohio

DIANA DEGETTE, Colorado

LOIS CAPPS, California

MICHAEL F. DOYLE, Pennsylvania

CHRISTOPHER JOHN, Louisiana

TOM ALLEN, Maine

JIM DAVIS, Florida

JANICE D. SCHAKOWSKY, Illinois

HILDA L. SOLIS, California

CHARLES A. GONZALEZ, Texas

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

CLIFF STEARNS, Florida

Vice Chairman

PAUL E. GILLMOR, Ohio

CHRISTOPHER COX, California

NATHAN DEAL, Georgia

ED WHITFIELD, Kentucky

BARBARA CUBIN, Wyoming

JOHN SHIMKUS, Illinois

HEATHER WILSON, New Mexico

CHARLES W. ‘‘CHIP’’ PICKERING,

Mississippi

VITO FOSSELLA, New York

STEVE BUYER, Indiana

CHARLES F. BASS, New Hampshire

MARY BONO, California

GREG WALDEN, Oregon

LEE TERRY, Nebraska

JOE BARTON, Texas,

(Ex Officio)

EDWARD J. MARKEY, Massachusetts

Ranking Member

ALBERT R. WYNN, Maryland

KAREN MCCARTHY, Missouri

MICHAEL F. DOYLE, Pennsylvania

JIM DAVIS, Florida

CHARLES A. GONZALEZ, Texas

RICK BOUCHER, Virginia

EDOLPHUS TOWNS, New York

BART GORDON, Tennessee

PETER DEUTSCH, Florida

BOBBY L. RUSH, Illinois

ANNA G. ESHOO, California

BART STUPAK, Michigan

ELIOT L. ENGEL, New York

JOHN D. DINGELL, Michigan,

(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)

(1)

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

2

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 overregulating 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 comVerDate 11-MAY-2000 08:58 Nov 23, 2004 Jkt 000000 PO 00000 Frm 00006 Fmt 6633 Sfmt 6633 96102.TXT HCOM1 PsN: HCOM1
3

mitments 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 athome 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

4

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:]

5

6

7

8

9

[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 optin 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:]

10

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12

13

14

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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

24

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 allstar 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

25

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:]

26

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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 51⁄2. Mr. Chairman, thank you so much for the opportunity to testify.

As you know, Congressman Markey, Congressman Pitts have

29

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.

30

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:]

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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.

32

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

33

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

34

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.

35

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, optout 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

36

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

37

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 optingout. 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.

38

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

39

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 makVerDate 11-MAY-2000 08:58 Nov 23, 2004 Jkt 000000 PO 00000 Frm 00043 Fmt 6633 Sfmt 6621 96102.TXT HCOM1 PsN: HCOM1
40

ing 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 thirdparty 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.

41

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 optout 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.

42

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.

43

This survey underscores the need for the bipartisan legislation—H.R. 3558/S.

1963—introduced by Representatives Joseph Pitts (R-PA) and Edward Markey (DMA) 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

44

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 carVerDate 11-MAY-2000 08:58 Nov 23, 2004 Jkt 000000 PO 00000 Frm 00048 Fmt 6633 Sfmt 6602 96102.TXT HCOM1 PsN: HCOM1
45

riers 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 carVerDate 11-MAY-2000 08:58 Nov 23, 2004 Jkt 000000 PO 00000 Frm 00049 Fmt 6633 Sfmt 6621 96102.TXT HCOM1 PsN: HCOM1
46

rier’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.

47

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

48

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.

49

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

50

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 privacybased 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.

51

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,

52

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 nonissue. 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

53

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?

54

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.

[The material follows:]

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56

57

58

59

60

61

62

63

64

65

66

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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 optin 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.

69

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

70

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

71

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 optout—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

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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 optin 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.

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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?

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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.]

[Additional material submitted for the record follows:]

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