**PRIVACY AND THE NII:
Safeguarding Telecommunications-RelatedPersonal Information
U.S. DEPARTMENT OF COMMERCERonald H. Brown, SecretaryDavid J. Barram,  Deputy SecretaryLarry Irving, Assistant Secretary andAdministrator, National Telecommunicationsand Information AdministrationWashington D.C.October 1995Assistant Secretary for Communications and Informationand Administrator, National Telecommunications and InformationAdministrationLarry IrvingActing Deputy Assistant Secretary, Deputy AdministratorMichele C. Farquhar**Office of Policy Analysis and Development, Associate AdministratorKathryn C. BrownPROJECT TEAM
Jerry Kang<1>Radhika Karmarkar<2>Lisa LeidigProject ContributorsOffice of Policy Analysis and   Development
Joseph L. GattusoAlfred M. LeeTim SloanLavern James(cover design)Mary Stewart(support staff)Office of the Chief Counsel
Barbara WellberyChief CounselTimothy RobinsonCathleen KellyCheryl Kinsey
Office of International AffairsCynthia Rich
Acknowledgements
We wish to thank Carol E. Mattey, now Deputy Chief of the FCC Common CarrierBureau's Policy and Program Planning Division, for her substantial role, whileat NTIA, in the preparation of NTIA's Privacy Notice of Inquiry. We wish tothank Michael Francesconi, Jim McConnaughey, Joanne Kumekawa, SallianneFortunato, and David Gardner for their assistance in reviewing drafts of thisreport and for their helpful comments and suggestions. We also wish to thankArthur J. Altenburg for his document layout and typesetting support.

<1>  Currently Acting Professor, UCLA Schoolof Law.<2>  Currently Attorney-Adviser, FCC CommonCarrier Bureau, Policy and Program Planning Division.

EXECUTIVE SUMMARY
As the National Information Infrastructure (NII) is built, more and moreindividuals will use it for a wide range of transactions.  In the course ofusing the NII, individuals will create information trails that could provideothers, in the absence of safeguards, with the personal details of their lives.
In this White Paper, the National Telecommunications and InformationAdminstration (NTIA) hopes to contribute to the broader privacy debate byaddressing the privacy issues related to a specific sector -- thetelecommunications sector.  Specifically, this paper focuses on the privacyconcerns associated with an individual's subscription to or use of atelecommunications or information service.  The overall purpose of the paper isto provide an analysis of the state of privacy in the United States as itrelates to existing and future communications services and to recommend aframework for safeguarding telecommunications-related personal information(TRPI).

The analysis provided herein reveals that there is a lack of uniformityamong existing privacy laws and regulations for telephony and video services. In fact, similar services are governed differently depending on how they aredelivered.  And, other communications services like those available over theInternet are almost entirely unprotected.  Furthermore, NTIA believes that itwill become increasingly difficult to apply existing privacy laws andregulations to communica tions service providers as services and sectorsconverge, and as new technologies evolve.

To rectify limitations in existing telecommunications privacy law and toprovide consumers with a uniform privacy standard for TRPI, NTIA proposes aframework that draws upon the Information Infrastructure Task Force's *NIIPrinciples for Providing and Using Personal Information*.  This framework hastwo fundamental elements -- provider notice and customer consent.  

Under this proposed framework, telecommunications and information serviceproviders would notify individuals about their information practices, abide bythose practices, and keep customers informed of subsequent changes to suchpractices.  Service providers would be free to use information collected forstated purposes once they obtain consent from the relevant customer. Affirmative consent would be required with respect to sensitive personalinformation.  Tacit customer consent would be sufficient to authorize the firmto use all other information.

NTIA believes that establishing minimum privacy protections across thecommunications industry would ensure that consumers are provided with areasonable level of privacy protection.  Uniformly applied, a common "base"standard could also prevent some industries from gaining an unfair competitiveadvantage.

Table of Contents

PRIVACY AND THE NII

INTRODUCTION
A. The Nature of Privacy

B. NTIA's Inquiry

C. Scope of the White Paper

D. Recommended Approach

II. CURRENT REGULATION OF TRPI

A. TRPI Collected by Telephone and Video Service Providers

B. Existing Privacy Protections Pertaining to Telephony Services

C. Current Privacy Protections Pertaining to Video Services

D. Lack of Uniformity

III. PROPOSED FRAMEWORK FOR COLLECTION ANDUSE OF TRPI

A. Notice

B. Consent

IV. CONCLUSION

APPENDIX A:  MARKETING PROFILES

I. BACKGROUND

A. Marketing Profiles:  The Heart of Targeted Marketing 

B. Sources of Information for Marketing Profiles 

II. THE PRIVACY ENVIRONMENT

A. Legal Environment 

B. Market Environment 

ENDNOTES
PRIVACY AND THE NII
*The real danger is the gradual erosion of individual liberties throughthe automation, integration, and interconnection of many small, separaterecord-keeping systems, each of which alone may seem innocuous, even benevolent,and wholly justifiable.*

U.S. Privacy Protection Study Commission<1>

*The numbers dialed from a private telephone—although certainly moreprosaic than the conversation itself—are not without "content." Most private telephone subscribers may have their own numbers listed in apublicly distributed directory, but I doubt there are any who would be happy tohave broadcast to the world a list of the local or long distance numbers theyhave called. This is not because such a list might in some sense beincriminating, but because it easily could reveal the identities of the personsand the places called, and thus reveal the most intimate details of a person'slife.*
Supreme Court Justice Potter Stewart
*Smith v. Maryland*<2>
I. INTRODUCTION
An advanced national information infrastructure (NII) promises enormouseconomic, social, and cultural benefits to its users and to the nation—enhancededucational and employment opportunities for all Americans, greater citizenparticipation, and improved delivery of government services. The NII can producethese benefits because it will facilitate and expand the flow of informationfrom people to people and from place to place.<3>However, many people maybe reluctant to use the NII if they are afraid that the personal informationtransmitted over it can be used in ways that are unexpected or inappropriate.Thus, if government and the private sector want to encourage the vigorousconsumer activity needed to unlock the full potential of the informationinfrastructure, they must acknowledge and safeguard the legitimate privacyinterests of NII users.
A. The Nature of Privacy
More than sixty years ago, Supreme Court Justice Louis Brandeischaracterized the right to privacy—"the right to be let alone [as] themost comprehensive of rights, and the right most valued by civilized men.<4> A 1993 public opinion survey by Louis Harris & Associates found that 83% ofAmericans are concerned about threats to personal privacy.<5> Thisreflects a five point increase over responses to the identical question posed ayear earlier, and a 49 point increase from a similar poll conducted in 1970.<6>In addition, a survey of members of the U.S. Chamber of Commerce revealed "astaggering 59.2% . . . stat[ing] that they view the emerging issue of privacy intelecommunications as very important; 34.8% felt it was moderately important.<7> Furthermore, the Privacy Rights Clearinghouse (PRC) reports that consumers are"frustrated by a lack of control they have over the use of their personalinformation;" and "suffer" from a lack of understanding about howinformation about them is collected, used, and distributed and from a"misunderstanding"of existing privacy protection laws and regula tions.<8>

"Privacy" means different things depending on the context.<9> Among the many notions of privacy, growth of the NII primarily raises concernsabout *information privacy*. That term refers to an individual's claim tocontrol the terms under which "personal information"— informationthat can be linked to an individual or distinct group of individuals (*e.g.*, a household)<10>—is acquired,disclosed, and used.<11>

Information privacy promotes two principal interests. It recognizes thatcontrol over personal information is important because mere awareness by othersof certain types of information is potentially harmful. For example, anindividual may want to keep certain types of health data confidential from thegeneral public because its disclosure could cause the person embarrass ment.Information privacy also recognizes that personal information can be usedimproperly, unfairly, or for purposes other than those intended by anindividual. For example, an individual may refuse to disclose his or her socialsecurity number or mother's maiden name, not because disclosure in itself wouldbe harmful but because that information could be used to gain telephone accessto banking records.<12>

Concerns about safeguarding privacy will likely grow as the NII becomes apervasive, functioning reality.<13> As the NII isbuilt, more and moreindividuals will use it to execute an ever-expanding range of transactionsinvolving, for example, business, entertainment, banking, education, recreation,and even health care. These transactions—by their very execution on the NII—createelectronic records, which are easily stored and processed.<14>

Further, because the costs associated with storing, processing, anddistributing personal records are continuously decreasing, accumulating personalinformation from disparate sources will become a cost-effective enterprise forinformation users with interests ranging from law enforcement to directmarketing.<15> For example, in one case,journalists spent an average of$112 and 75 minutes on-line to find financial, legal, marital, and residentialhistories of various luminaries, such as movie producer George Lucas and WhiteHouse Chief of Staff Leon Panetta.<16> Finally,entirely new modes ofcommunication and transactions may be created that are not contemplated bycurrent privacy regulations and policies,<17>which are typically tied totoday's or even yesterday's technologies. For instance, interactive, switched,broadband communications networks, which will enable individuals to educate andentertain themselves, to shop, to receive health care, to bank, and toparticipate in government over a single network, could pose new privacyconcerns. In the absence of subscriber privacy provisions appropriate to suchnetworks and technologies, it will be possible for others to track and storeinformation about the daily activities of one's life.
B. NTIA's Inquiry
These developments presage an information environment in which more personalinformation will flow more quickly, more widely, more invisibly, and morecheaply with fewer legal and social constraints. To understand better theprivacy issues implicated by that environment, the National Telecommunicationsand Information Administration (NTIA)<18>released a Notice of Inquiry<19>on private sector use of telecommunications-related personal information.<20>We received 46 formal comments from industry, the press, academics, privacyadvocates, and individuals.<21> Thesecomments, supplemented byconsultations with stakeholders in the privacy debate, feedback from experts,and independent research, form the basis of this report. NTIA hopes that thisWhite Paper will serve as a catalyst, inspiring industry and consumer advocatesto work together to instill the consumer confidence essential for the viabilityof the NII. 
C. Scope of the White Paper
As the President's adviser on telecommunications and information policy,NTIA in this paper will focus on private sector collection, use, anddissemination of telecommunications- related personal information (TRPI)—personalinformation that is created in the course of an individual's subscription to atelecommunications or information service or as a result of his or her use ofthat service.<22> To illustrate the concept ofTRPI, consider anelectronic mail service that allows individuals to log on to the service viamodem and send e-mail messages through the Internet.<23> To subscribe tothis service, the provider will typically collect some basic information aboutthe customer, such as name, home address, home telephone number, work telephonenumber, type of e-mail service requested, and credit card (or other payment)information. Once the e-mail service has been installed, additional data will begenerated each time the customer sends an e-mail message. That includes all thepersonal information created in the course of routing a message from theindividual to the addressee (*e.g.*, header information on an e-mailmessage), as well as certain accounting information, which, depending on how theservice charges its customers, could include the date, time, subject line ofmessage, and its length. All of this subscription and usage data constitutesTRPI.

Although most consumers are probably aware that telecommunications andinformation service providers collect a wide range of subscription data, theymay be less aware of providers' accumulation of other TRPI and the uses to whichthat data can be put. Many consumers may have the same level of awareness as thewoman who told a caller trying to sell long distance service that she did notmake many out-of-town calls:

*"I'm surprised to hear you say that," she recalls him saying. "Isee from your phone records that you frequently call Newark, Delaware, andStamford, Conn." . . . "I was shocked, scared, and paranoid," sherecalls. "If people are able to find out who I call, what else could theyfind out about me?<24>*

The risks for consumers will likely increase in the future as severalrelated factors induce providers of telecommunications and information servicesto become more sophisticated and aggressive in their use of TRPI. First, thecontinuing growth of competition in those markets will increase the number offirms competing for consumer attention. In that environment, companies like theenterprising long distance service provider in the foregoing anecdote will findTRPI a powerful resource for identifying potential customers and tailoring thecompanies' marketing strategies to maximize customer response.

Second, as established service providers diversify into other lines ofbusiness, their existing reservoir of TRPI will help them sell those newservices more effectively and at less cost. Thus, when MCI and Rupert Murdoch'sNews Corp. announced a joint venture to market on-line information services, MCIexecutives said that they would use TRPI in their "Friends and Family"database to offer these services to some of MCI's current long distancecustomers.<25>

Third, as competition continues to squeeze profit margins, more and moretelecommuni cations and information service providers may come to view the saleof TRPI as an additional, low-cost revenue stream. However, it is not clear towhat extent consumers will accept such practices. For example, althoughcompanies have long made a practice of extracting information from local phonebooks and selling it to marketers, when telephone companies have announced theirintent to sell customer listings, they have been met with opposition. In 1990,New York Telephone informed its customers through billing statements about itsplans to sell customer listings, and 800,000 customers asked to have their namesremoved from the lists.<26> Bell Atlanticexperienced a similar reactionwhen it announced plans to sell its "white pages" directory lists inJuly 1995.<27> Furthermore, in response to thepublic comments the FederalCommunications Commission (FCC) received to its Notice of Proposed Rulemaking onCaller ID,<28> it passed rules prohibiting the saleor reuse of automaticnumber identification (ANI)- derived information without first notifying theoriginating telephone subscriber, and obtaining his or her affirmative consentfor such reuse or sale.<29> ANI, a subset ofTRPI, is a signaling protocolused by carriers to automatically identify a calling party's billing telephonenumber. Some states have adopted similar rules restricting the use of ANI.<30>
D. Recommended Approach
The coming years thus promise increasing tension between the desire oftelecommunications and information service providers to expand the use of TRPIto market new services—many of which will doubtless benefit consumers—andconsumers' desire to control the dissemination of potentially sensitive personalinformation. The relevant questions for policy makers are:  what level ofprivacy protection adequately balances the legitimate interest of individualsand service providers; whether existing laws and regulations provide the desiredlevel of protection; and, if not, what changes should be made.

The United States currently has no omnibus privacy law that covers theprivate sector's acquisition, disclosure, and use of TRPI. Instead, Americanprivacy law comprises a welter of Federal and state statutes and regulationsthat regulate the collection and dissemination of different types of personalinformation in different ways, depending on how it is acquired, by whom, and howit will be used.<31> Although these laws providesome level of privacyprotection, they are not comprehensive in the sense that they do not applyuniformly to all service providers.

As discussed more fully below, this is particularly true with respect to theprincipal regulations governing the acquisition and use of TRPI by certainproviders of telecommunica tions and information services—the FCC's rulespertaining to telephone companies' use of customer proprietary networkinformation (CPNI) and the provisions of the 1984 Cable Act regulating thedisclosure of "personably identifiable" subscriber information bycable television operators.<32> Because thoserequirements were imposed ona limited group of service providers, they afford consumers little, if any,protection against inappropriate use of TRPI by other types of serviceproviders. As importantly, the limited applicability of those regulationsvirtually guarantees that different firms will have differing privacyobligations even when they offer similar services, creating a situation thatcould be potentially disadvantageous to one competitor or group of competitors.

To rectify these limitations in existing telecommunications privacy law andto provide consumers with a uniform privacy standard, NTIA has applied theInformation Infrastructure Task Force's (IITF)<33>*NII Principles forProviding and Using Personal Information* to the telecommunications sector inorder to offer a framework for the acquisition and use of TRPI bytelecommunications and information service providers. We hope that thisrecommendation will contribute to the broader debate regarding privacy concernsand the NII, assist the Administra tion's IITF, its Advisory Council,<34>the FCC, Congress, state and local governments, and private sector policy makersas they grapple with this important issue. NTIA also hopes that this applicationof the IITF's Principles will encourage other sectoral analyses.

As stated above, NTIA's proposed framework draws upon the IITF's Principlesand has two fundamental elements—provider notice and customer consent.Under NTIA's proposed framework, each provider of telecommunications andinformation services would inform its customers about what TRPI it intends tocollect and how that data will be used. A service provider would be free to usethe information collected for the stated purposes once it has obtained consentfrom the relevant customer. Affirmative consent would be required with respectto sensitive personal information. Tacit customer consent would be sufficient toauthorize the use of all other information.

This approach, if embraced by industry, would allow service providers andtheir customers to establish the specific level of privacy protection offered ina marketplace transaction, free from excessive government regulation, so long asthe minimum requirements of notice and consent are satisfied. The uniformitycontemplated by this approach means its adoption would not create competitiveimbalances among rival firms, but would preserve their ability to compete onprivacy as vigorously as they compete on price, service, and quality.<35>Further, because NTIA's recommended framework gives companies considerableflexibility in giving notice and securing consent, implementation of thatapproach should not be overly burdensome. On the other hand, this approach wouldreassure consumers that their reasonable privacy expectations will be respectedwhen they use the NII. Uniformity across the communications sector shouldencourage more consumer use of the NII which, in turn, would create and expandmarket opportunities for information and to service providers of all types. Forthese reasons, NTIA believes that it is in the private sector's interest toadopt the privacy framework outlined in this paper, without waiting for formalgovernment action.
II. CURRENT REGULATION OFTRPI
Communications providers play an absolutely critical role in transmittinginformation among transacting parties in our society. In the course oftransmitting information, communications providers are privy to a wide varietyof TRPI. For example, in providing long-distance telephone service, telephonecompanies generate calling records that identify the origination and destinationtelephone numbers, and the time and length of each phone call. Such informationmay be disclosed or used in ways inconsistent with an individual's expectationof privacy. In one prominent case involving two Florida Public ServiceCommission officials, a private investigator obtained a year's worth<36>of telephone calling records.<37> Although theofficials were surprised tolearn of the activities of the private investigator, a subsequent investigationconfirmed that the disclosure by the telephone company was legal under state andFederal law.<38>

While recognizing a growing variety of services in the communicationsmarketplace, this discussion will focus on two particular communicationsservices—telephony and video—as representative examples of how andwhat types of TRPI are routinely collected and of regulatory and statutoryprotections currently available for limiting the disclosure of TRPI. This reviewindicates that current legal norms have led to a patchwork of privacy protectionthat may lead to disparate treatment of different service providers even as theyprovide similar services. Already, technological advances and marketderegulation are dissolving traditional distinctions between communicationsproviders such as telephone companies and cable operators. Telephone companiesare beginning to offer cable-like services; cable operators are beginning tooffer telephony-like services; and companies are forming hybrid alliances todevelop new advanced communications services.<39> With an increasingconvergence among services and service providers, differences in the handling ofTRPI may lead to competitive inequities and customer confusion, which may inturn hinder the deployment of new services and technologies. 
A. TRPI Collected by Telephone and Video Service Providers
Telephone services—both local and long distance services—generatea wealth of TRPI. When a customer subscribes to a telephone service, TRPI in theform of subscription data is collected to initiate and secure the commercialrelationship between the individual and the telephone service provider. Suchdata might include the subscriber's name and address; number and types of accesslines (*e.g.*, residential or business) used; any chosen advanced services(*e.g.*, call handling features such as call waiting, caller ID, callforwarding, and anonymous call rejection); and choice of prescribedinterexchange carrier.

With each phone call an individual makes, the telephone service providercollects TRPI in the form of transactional data. This includes routing datanecessary to deliver the communicative content between the calling parties, aswell as the accounting data necessary to bill the appropriate individuals. Asnoted above, for each call, this transactional data typically includes theoriginating phone number, destination phone number, and depending on thecircumstances, the time and length of the call.

As Justice Stewart noted,<40> these callingrecords can reveal a greatdeal about the individual even without divulging the communicative contents ofthe phone call. With the help of a reverse- telephone directory, available inmany libraries, one can easily identify the names and addresses associated withthe originating and destination phone numbers. Such information could reveal theidentity of one's friends and colleagues, and the patterns of one's work andsleep.

Video service providers collect types of subscription data similar to thatcollected by telephone service providers. In addition to name, address, andtelephone number, they typically will compile information concerning tiers ofservice or specific premium channels requested, carrying such programming aspopular movies, children's shows, sports, or adult entertainment. Subscriptiondata will also likely include the types of equipment necessary to initiate thevideo service, such as number and type of wireline outlets or satellite dishes,set-top boxes, and remote controls. In addition, transactional data will becollected whenever individuals select specific video programs that are billedseparately, as in pay-per-view programs. This may include the video programselected, the date, and time.

Thus, a great deal of information is collected currently by both telephonyand video service providers. However, because of differences in the way thatthose markets developed and the way in which they were regulated, theregulations and policies governing the accumulation and use of such informationvary among markets and, frequently, among firms competing in the same market.The following discussion highlights that variety and outlines some of theproblems that it creates for safeguarding personal information privacy, now andin the future.
B. Existing Privacy Protections Pertaining to Telephony Services
In addition to government regulations concerning the acquisition,disclosure, and use of TRPI by telephone service providers, many of thosecompanies have long-standing internal policies to safeguard customer privacy.<41>These policies generally make one restriction clear:  calling records shall notbe disclosed to third parties. For example, BellSouth stated in its commentsthat it does not provide unauthorized third parties access to consumer tollrecords or accounts.<42> A few telephonecompanies have recently developedmore formal privacy codes that specifically inform residential customers aboutcompany information practices and options for limiting access to personalinformation. For example, Pacific Bell indicated that its privacy guidelinesallow customers to prohibit information collected about them to be used formarketing purposes.<43> Bell Atlantic'sresidential customer informationprivacy principles include disclosure policies regarding how personalinformation is collected and used.<44> InSeptember 1995, MCI announcedthat online internetMCI customers could call a toll free 800 number to preventpersonal information about themselves from being included in on-line directoriesor made available to third parties.<45>

There is evidence, however, that the privacy policies of telephone companiesmay not always be followed. For example, it appears that private investigatorsregularly obtain calling records. As reported in the Wall Street Journal:

*Although most phone companies say they won't release information unlessthey are subpoenaed, the information is released on an informal basis all thetime, says Mr. [Robert Ellis] Smith, of Privacy Journal. He says most suchreleases are arranged by law-enforcement officials who have relationships withtelephone-company employees.<46>*

In another well known example, an Alaskan oil pipeline company hired aprivate security firm to obtain the calling records of its critics.<47>During a subsequent investigation, a former state prosecutor testified at thehearings that telephone companies routinely provide calling records tocontractors, with knowledge that the records will be sold to privateinvestigators.<48> In fact, companiesspecializing in calling recordstarget advertisements to private investiga tors.<49>

As for government action, the FCC has established regulations governing theuse and disclosure of customer proprietary network information (CPNI).<50>CPNI is essentially TRPI that is collected in providing telephony services and"encompassesany information about customers' network services and their use of thoseservices that a telephone company possesses because it provides those networkservices.<51> CPNI includes "informationrelated to the type(s),location(s), and quantity of all services to which a customer subscribes, howmuch the customer uses them, and the customer's billing records.<52> These requirements only apply to interstate services.   

The Commission's CPNI rules were not specifically implemented to addressprivacy concerns.<53> The primaryconsideration was that if dominantservice providers had detailed information about customers' basic servicerequirements, this information could be used to gain an anticompetitiveadvantage in unregulated markets, specifically the enhanced service and customerpremises equipment markets. Consequently, the rules only apply to a limitednumber of companies—the Bell companies,<54> and GTE—and do notprotect the CPNI of all customers.<55>

Under the CPNI rules, if a customer requests confidential treatment of CPNI,the Bell companies and GTE must not disclose this information to theiraffiliates or to third parties. If no confidentiality request is made, then therules vary about the type of protection that the data is accorded.<56> TheBell companies and GTE are required to notify only multi-line customers of theright to request confidential treatment of CPNI. Single-line and residentialcustomers need not be notified, and no prior authorization is required beforeusing the CPNI of these customers for marketing or other purposes ancillary tothe provision of telephone service. 

More significantly, there are no FCC prohibitions on the disclosure and useof CPNI by more than one thousand independent local exchange carriers,non-wireline cellular carriers, interexchange carriers, competitive accessproviders, or other businesses engaged in the provision of telecommunicationsservices. Similarly, the FCC's CPNI rules currently would not apply totraditional cable operators when they begin to provide telephone service.
C. Current Privacy Protections Pertaining to Video Services
Unlike telephone service providers, video carriage service providers<57>can play a dual role, providing both programming and the transmission servicenecessary to reach their customers. Although cable television service is themost widely known video carriage service, many telephone companies haveannounced plans to provide video carriage through wire-based telephone networksadapted to transmit video content. Moreover, a growing number of firms areoffering video programming services using wireless technologies such as directbroadcast satellites (DBS) and "wireless cable" services.<58>

The privacy concerns associated with video carriage are similar to thoseconcerns that prompted passage of the Video Privacy Act of 1988 (Video Act).During Judge Robert Bork's Supreme Court nomination hearings, 146 video titlesrented by him and his family were disclosed to the press.<59>Congressional testimony revealed that Judge Bork's case was not isolated.Various examples of demands for video transactional records were mentioned,including an attempt to use video tape records to show that a spouse was anunfit parent, and a defendant in a child molestation case who wanted to showthat the child's accusations were based on movies viewed at home.<60>

The Video Act prohibits video tape service providers from knowinglydisclosing personal information, such as titles of video cassettes rented orpurchased, without the individual's written consent.<61> It permitsdisclosure of mailing list information (names and addresses) if the individualhas been given a conspicuous opportunity to prohibit such disclosure.<62>The mailing list can identify the subject matter (but not specific titles) ofcustomer video selections, as long as that mailing list is used solely to marketgoods and services directly to the individual.<63> Finally, the Video Actrequires personal information to be destroyed "as soon as practicable, butno later than one year from the date the information is no longer necessary forthe purpose for which it was collected," provided that statutorilyrecognized requests for such information are not pending.<64>

Congress also acknowledged potential privacy concerns associated withdelivering video programming over cable networks when it included subscriberprivacy provisions in the Cable Communications Policy Act of 1984 (Cable Act).The Cable Act requires cable operators to notify subscribers at the time ofsubscription and, at least annually thereafter, of the operator's personalinformation practices.<65> Absent a subscriber'sprior written orelectronic consent, the Act allows a cable operator to collect personalinformation only if it is necessary to render the requested services or todetect unauthorized reception of cable communications.<66> Further, theCable Act generally prohibits the disclosure of personal information unless suchdisclosure is necessary to render the services requested or to a "legitimatebusiness activity related to" such service.<67> With few exceptions,any other collection or disclosure of personal information requires priorconsent by the individual.<68> Finally, the CableAct requires personalinformation to be destroyed if the information is no longer necessary for thepurpose for which it was collected and if there are no legally recognized,pending requests for such information.<69>

A review of the Video Act reveals that it may not be applicable to consumersof video services provided over telecommunications networks. This is because theVideo Act was intended to cover the traditional rental, sale or delivery ofvideo cassette tapes or similar material from a video store.<70> Ittherefore may be argued that because video carriage does not involve a deliveryof a physical tape or similar material to the individual, and is insteadtransmitted electromagnetically through wireline or wireless facilities, theVideo Act does not apply to video programming transmitted throughtelecommunications networks.<71>

While the Cable Act obviously applies to video carriage provided by cableoperators, it does not expressly apply to video carriage by DBS or wirelesscable service operators.<72> Moreover, it isuncertain whether it willapply to LEC provision of video programming. This question turns on whether LECsare deemed "cable operators" within the meaning of the Cable Act. IfLECs operate under a purely common carrier VDT model, they may not be consideredcable operators.<73> On the other hand, if LECsoperate in a mannersimilar to cable operators—then they may be deemed cable operators.<74>In absence of other privacy provisions regarding personal information generatedas a result of subscribing to video services electronically, consumers ofseemingly like video services may or may not receive disparate levels ofprotection, while providers of these services may or may not be subject todifferent regulatory requirements.
D. Lack of Uniformity
This brief review of TRPI disclosure protections relating to telephony andvideo carriage services reveals the lack of *intra*service uniformity:like services do not have like privacy protection. With respect to telephonyservices, for example, Federal regulations grant individuals the right to askfor confidential treatment of CPNI but only from certain telephone companies—the Bell companies and GTE. Similarly, the notice requirements that apply to theBell companies and GTE differ depending on the type of consumer. Multi-linecustomers are given notice about their privacy rights; single-line customers arenot. To complicate matters further, a few states provide privacy protection forintrastate service regardless of which telephone company is involved.

There is also a lack of intraservice uniformity for video carriage. Theprivacy provisions of the Cable Act do not apply to DBS and wireless cableoperations. And it is not clear whether the Cable Act applies to LECs thatoperate as video service providers—although from a consumer's perspective,such services are functionally indistinguishable.

In addition, there is a lack of *inter*service uniformity becauselike-types of information are not treated in like-ways, across differentcommunications services. Many other types of communications services thatgenerate TRPI, as sensitive as TRPI generated by telephone service and videocarriage, are almost entirely unprotected. For example, the Internet, a globalnetwork of networks, which can be used for interactive, point-to-multi-pointcommunications, is not subject to consumer privacy regulations. Internet accessis provided by dedicated Internet service providers (ISPs) or on-line servicesthat have gateways to the Internet.<75>Depending on the particulartechnological configuration, the ISP may have TRPI in the form of "calling"records (*e.g.*, what Internet Protocol address communicated with whom andwhen), transactional records of files uploaded or downloaded, and electronicmail messages sent and received.<76> Besidesthe Electronic CommunicationsPrivacy Act of 1986 (ECPA), which forbids only divulging the*contents* ofa communication, no federal privacy laws apply to TRPI collected by those whoprovide Internet access.<77>

On the horizon are a new generation of communications services that willcombine the two- way, switched features of telephone service, the fullinteractivity of the Internet, and the broadband capacity of video carriage.LECs planning to carry video may expand their facilities to include fullytwo-way interactive video traffic.<78>Traditional cable operators arerestructuring their service platforms with fiber-optic trunk lines, datacompression, and high speed switching to provide interactive multimediacommunications.<79> Importantly, convergencewill occur not only betweentechnologies, firms, and services, but also between functions so that communications providers will become content providers and vice-versa. As these newcommunications services become widely available, providers will have access togreater amounts of more sensitive TRPI. Of course, one cannot know preciselywhat sorts of TRPI will be collected because these new communications servicesare not fully designed, much less fully operational. It is also uncertain which,if any, privacy protections will apply to such new services. For example, it isuncertain whether the Cable Act could apply to these new interactive broadbandnetworks because truly interactive services may not be deemed a "cableservice" within the meaning of the Act.<80>
III. PROPOSED FRAMEWORK FOR COLLECTION ANDUSE OF TRPI
The limitations and weaknesses in the telecommunications privacy regulationsdiscussed above underscore the need for a more comprehensive approach governingthe collection, use, and dissemination of TRPI by providers oftelecommunications and information services. Of course, any such approach mustrecognize that information privacy can never be absolute in a sociologicalsetting:  no individual who lives in a society can have total control over eachbit of personal information. In fact, as various commenters pointed out, thefree exchange of personal information promotes consumer welfare by encouragingfirms to develop and market the goods and services that most interest theirexisting and potential customers.<81> On theother hand, the newinformation environment may promote the acquisition and use of personalinformation in ways that violate deeply held societal values aboutconfidentiality and fairness. 

The Administration recognizes that, in some circumstances, "anindividual's privacy can often be best respected when individuals andinformation users come to some mutually agreeable understanding of how personalinformation will be acquired, disclosed, and used.<82>  Under this "contractualapproach" to privacy protection, companies would inform their customersabout what sorts of personal information the firms intend to collect and theuses to which that information would be put. Consumers could then either accepta company's "offer," or reject it and shop around for a better deal.The contractual approach reflects the hope that individuals and the parties withwhom they do business can agree, in whatever form the agreements may be made,about how TRPI and other personal information will be acquired, disclosed, andused —all without substantial involvement by the government as referee.Rather than relying on the government to determine what information should beprotected, consumers and service providers could decide among themselves what isthe optimal level of privacy protection. In this way, the contractual approachseeks to minimize government involvement in assessing and resolving privacyproblems.

Nevertheless, although the contractual approach has many virtues in theory,it may not provide a sufficient level of privacy protection in practice. Thatapproach yields maximum benefit in a vigorous competitive marketplace, whereprivacy is one of the terms on which businesses struggle for customers and whereconsumers can walk away from transactions that do not provide adequate privacyprotection, secure in the knowledge that other offers will be readily available.In contrast, in markets where essential or highly desired services are providedby a single firm or a small group of dominant firms—such as the localtelephone and video service markets—competition on privacy will be, atbest, weak and consumers will not be able to reject or renegotiate unacceptableprivacy "offers."  In other circumstances, a contractual approachcould produce instances where service providers offer privacy protection only ata premium, to the detriment of poor and low income consumers.

For these reasons, NTIA does not support adoption of a "pure"contractual approach. Rather, we favor a modified contractual model that allowsbusinesses and consumers to reach agreements concerning the collection, use, anddissemination of TRPI, subject to two fundamental requirements—providernotice and customer consent. Our recommended approach should adequately protectindividuals' legitimate privacy interests without excessive governmentintervention in the marketplace. Further, by giving consumers effective controlsover the use of TRPI generated by their subscription to and use of the NII, thatapproach should expand consumer demand for NII facilities and services. That, asnoted above, should produce substantial benefits for individuals, businesses,and society as a whole. Because these benefits can be produced with minimalcosts to business, NTIA expects that the private sector will have strongincentives to voluntarily implement the modified contractual framework outlinedbelow. If such private sector action is not forthcoming, however, that frameworkcan and should form the basis for government-mandated privacy regulations orstandards.
A. Notice
The notice component of NTIA's modified contractual framework is grounded inthe principles of fair information practices released by the IITF's PrivacyWorking Group in June 1995, after two years of deliberation, including fieldhearings and two rounds of public comment.<83>At the crux of theseprinciples is the Notice Principle, which states:

*Information users who collect personal information directly from theindividual should provide adequate, relevant information about:*Why they are collecting the information; 
- What the information is expected to be used for; [and]   What steps will be taken to protect its confidentiality, integrity,and quality<84>
Adequate notice requires that consumers be informed about how personalinformation is collected, processed, exchanged, disclosed, and used in ourrapidly evolving information infrastructure.<85>In any particulartransaction, an individual should have adequate information on which to decidewhether to accept the offered service under the clear terms concerning the useof personal information. Such notice should be conspicuous and in plain languageso that consumers have the necessary information to exercise sound judgmentabout the level of privacy protection that they desire and what is available tothem.<86> It must clearly instruct the consumerthat a choice is required,and it must reach the consumer *before* the company uses the TRPI forunrelated purposes.

These criteria provide a framework against which "adequacy" may beassessed. When personal information is collected and used only to render aservice, explicit notice may not be required because the individual is alreadyaware of the extent of that information's collection and use. For example, if acompany sells long distance service to an individual, that company ought to beable to use TRPI to detail the customer's calling patterns and to develop a longdistance offering that better suits the consumer's needs. However, for usesunrelated to the original service offering, consumers may have no suchexpectation and, indeed, may have given little thought to how their TRPI couldbe used. Put another way, a consumer's decision to purchase one service cannotreasonably be seen as tacit consent for company use of TRPI to develop andmarket another service. Thus, telecommunications and information serviceproviders should give their customers plain and conspicuous notice of anyunrelated or ancillary use of their TRPI.<87>

Notice requirements should also change as telecommunications and informationcompanies become multiple service providers. For instance, local exchangecarriers will likely offer a variety of different services, including access tothe Internet and interactive multimedia services in addition to local telephoneservice. Although many consumers might have implicitly understood, in the past,that phone companies would use information collected about them for offeringstailored to their particular needs, subscribers to these more advanced networksmay not understand that TRPI collected about them for telephone and videoservice purposes could also be used to sell them on-line shopping services, forexample. As a result, more explicit notification may be needed for subscribersof multiple service networks to understand how their TRPI will be used forinternal customer marketing purposes.<88>

There may be a range of notice procedures that will adequately informconsumers about the intended use of their TRPI, while minimizing costs forindustry and, ultimately, customers. For some service providers, notice can mosteasily be given at their first contact with prospective customers. For example,when individuals subscribe to most on-line information services, such asCompuServe or Prodigy, they are typically given several choices concerningdissemination of their TRPI, including the option not to have such informationdisclosed at all. Other companies may find it more cost effective to include aprivacy notification in the written materials they send to consumers to confirmthe terms and conditions of their service agreement. Still other firms mayprovide notice as one of the myriad inserts that they commonly include in theircustomers monthly bills. If the notification meets the criteria outlined above,it should adequately address the needs of consumers.<89>

This approach gives companies sufficient flexibility that they should beable to notify their customers about their information practices withoutincurring excessive costs. When firms receive service requests from customersover the phone, companies typically spend time to collect a wide range ofinformation from those customers. Similarly, companies commonly send a mass ofwritten materials to their current and prospective customers, seeking tointerest them in new services. The incremental costs of including a privacynotification in those phone conversations or those written solicitations shouldnot be significant.
B. Consent
The other fundamental component of NTIA's privacy framework is customerconsent. Notifying consumers of company practices concerning TRPI would havelittle practical effect if consumers did not have a meaningful opportunity toaccept or reject the terms offered. Indeed, in those service markets dominatedby a single supplier—such as local telephone service and the delivery ofmultichannel video programming to the home, the absence of any consentrequirement would give consumers only a Hobson's choice—between acceptingcompany TRPI policies that do not provide an acceptable level of privacyprotection and foregoing a highly desired, even essential service.

Most companies agree that individuals should have the right to limit orprohibit ancillary or unrelated uses of personal information, such as disclosinginformation to third party marketers. In the words of the Direct MarketingAssociation (DMA)<90>—whosemembership includes many communicationsproviders:

*Consumers who provide data that may be rented, sold, or exchanged fordirect marketing purposes periodically should be informed of the potential forthe rental, sale, or exchange of such data. Marketers should offer anopportunity to have a consumer's name deleted or suppressed upon request.<91>*
*Consumers who provide data that may be rented, sold, or exchanged formarketing purposes should be informed . . . of the opportunity to opt-out of themarketing process.<92>*

Similarly, Time Warner encourages the use of the Department of Health,Education and Welfare's 1973 privacy principles which, among other things, statethat "[i]ndividuals should have the ability to limit the disclosure ofinformation about them that was obtained for one purpose from being disclosedfor other unrelated purposes.<93>

The more controversial policy issue is how consumer consent should beobtained. That debate centers around two contending concepts—"opt-in"and "opt-out.<94>  Under an opt-inapproach, companies cannot useTRPI for ancillary purposes until the individual first gives consent. In anopt-out program, information can be used in an ancillary manner unless theindividual affirmatively opts-out of such practices within some allotted time.Opt-in thus requires expressed consent:  an individual's silence means that theinformation *cannot* be used. Opt-out garners tacit consent:  silencemeans that the information *can* be used.

The choice between opt-in and opt-out is not a simple one. Although privacyis a fundamental personal right that must be adequately protected, it is alsotrue that the level of privacy protection desired varies widely among consumers.Furthermore, the free flow of information—even personal information—promotesa dynamic economic marketplace, which produces substantial benefits forindividual consumers and society as a whole. 

Not surprisingly, many service providers argue that securing customerconsent through an opt-in procedure "could harm innovation and preventdesirable services from emerging.<95>  Theyalso contend that individualscannot accurately predict today what they may find useful tomorrow. As a result,an opt-in approach may prevent uses of personal information that individuals mayin fact want.<96> In fact, in a national surveyconducted by Louis Harris,a majority of consumers polled (52%) indicated that they would be interested inparticipating in subscriber profiling activities—receiving advertising andinformation about products and services matching their particular interests—overinteractive networks, and 48 percent would be "somewhat" interested insupplying information that would enable them to receive special offers.<97>On the other hand, it may be argued that individuals cannot accurately predicthow seemingly innocuous information may be used in inappropriate ways. Thus, anopt-out approach may lead to uses of personal information that individuals wouldreject.

NTIA believes, on balance, that the mechanism for securing customer consentfor company use of TRPI should depend on the nature of that information.Companies should not make any ancillary use of "sensitive" TRPIwithout first obtaining explicit authorization from the relevant customer. Onthe other hand, a company should be allowed to use non-sensitive TRPI forunrelated purposes unless the customer affected, having been notified of thecompany's plans, takes some action stopping such use—such as making atelephone call or mailing in a form— by a certain date.<98> When thedate for customer action has passed—but not before—the company shouldbe free to use the customer's TRPI in the ways identified. Whatever themechanism for securing customer consent, however, consent should never be aprecondition for receiving service. That is to say, subscribers may not bedenied service because they decline to authorize use of their TRPI for purposesother than rendering the service requested.<99>

Requiring affirmative consumer consent in the case of sensitive informationis consistent with the intuition that individuals should have greater control ofsensitive information because of the greater harm that improper disclosure oruse of such information may cause.<100> Ithas the added benefit ofminimizing the aggregate transaction costs in obtaining an individual'sauthorization. Many individuals would likely reject the ancillary use ofsensitive TRPI. Instead of requiring the many who reject the ancillary use frombearing the transaction costs of opting- out, it is more efficient to requirethe few who approve that use to opt-in. On the other hand, because most peoplewould likely not object to ancillary use of non-sensitive TRPI, it makes senseto give the responsibility of protecting that information to the few consumerswho want it protected.

The promised interactivity of the NII may diminish the need to make a policychoice between opt-in and opt-out. Such interactivity would make it possible forservice providers to obtain consent to use TRPI from subscribers electronicallybefore any services were rendered. This development would reduce the need forprivacy protection policies that impede the flow of information exchange bycreating "a process that requires mailing out consent forms, waiting forthem to return, and then processing them before any data can be used orcollected.<101>  It would also allow providersgreater flexibility toconstruct a variety of contract levels with subscribers for use of their TRPI,while leaving it up to consumers to ultimately determine which levels of accessand use of their TRPI they will allow.

NTIA also recognizes the importance of enhanced consumer education in thisarea.<102> Education serves two purposes: empowerment— givingconsumers control of how their personal information is used; and understanding—helpingconsumers to understand how their personal information can be used in beneficialways, thereby increasing their willingness to use the NII. Similar to theefforts of some Bell companies to educate consumers about their options forhandling unwanted sales calls according to the provisions of the TCPA,<103>NTIA recommends that industry work with consumer advocacy organizations,industry associations, and community groups to more effectively educateconsumers about their opportunities to limit disclosure of TRPI.<104>Consumer education should be an integral part of any effective providernotification policy.
IV. CONCLUSION
Although the United States currently has a number of laws and regulationsgoverning private sector acquisition, use, and disclosure of TRPI, thoseprovisions are limited in scope and inconsistent in application. They generallyare confined to a specified group of existing services, and do not apply to allproviders of any one service. Developed to address particular problems inparticular circumstances, prevailing privacy protections in this area do notapply to many of the next generation of services that are rapidly arriving andcould not readily be adapted for that purpose.

Some remedial action is warranted. The privacy framework described in thispaper enables service providers and their customers to come to mutually agreedupon contracts regarding the use of TRPI independent of government intervention.The advantages for consumers and the private sector are obvious. Consumersbenefit from a privacy standard that affords them with the same TRPI safeguardsfor like services across the communications sector. Uniform, effective andunderstandable privacy protections should also reduce a major potential barrierto consumer use of the NII as consumers better understand how their personalinformation is used and exercise their right to control its use. Increasedpublic confidence in how personal information is acquired, disclosed, and usedcould thereby stimulate consumer demand for the many services that businesseswill seek to offer over that network of networks.

Uniform privacy requirements will further benefit the private sector byeliminating a potential source of competitive advantage or disadvantage amongrival providers of telecom munications and information services. At the sametime, NTIA's recommended approach gives private firms considerable flexibilityto discharge their privacy obligations in a way that minimizes costs to thefirms and to society. For all of these reasons, NTIA believes that bothconsumers and the private sector will benefit substantially from voluntaryimplementation of that approach. If, however, industry self-regulation does notproduce adequate notice and customer consent procedures, government action willbe needed to safeguard the legitimate privacy interests of American consumers.

Ultimately, defining the balance between the free flow of information and anindividual's right to privacy over an NII revolves around trust. If consumersfeel that their personal information will be misused or used in ways that differfrom their original understanding, the commercial viability of the NII could bejeopardized as consumers hesitate to use advanced communications networks.Whether through government intervention or industry self-regulation, consumerswill have to feel comfortable with how personal information is used, and withtheir ability to control its use in a meaningful way.

Report EndnotesAPPENDIX A:  MARKETINGPROFILES
*So, we can look at your customers and tell you a lot more about them.More than you ever thought possible. And not as a group, but as individuals. Byexact age. Sex. Income. Lifestyle characteristics. Life event. And more. And wecan help you decide the most effective ways to use this type of information toachieve your marketing goals.*Advertisement of Metromail, Inc.<1>

In addition to communications providers, many other parties will also haveaccess to consumer information on the NII. These others include transactingparties, such as merchan disers, that do business with individuals viatelecommunications but have no role in the communications service itself. Theyalso include other types of transaction facilitators, such as electronic paymentproviders, that help individuals and transacting parties execute theirtransactions.

The enormous variety of transacting parties and transaction facilitatorsmakes it impos sible to analyze the particular privacy concerns associated witheach party. One common thread, however, links how nearly all these players seekto use TRPI:  to create marketing profiles. A marketing profile is a record ofan individual's characteristics created by acquiring personal information frommultiple sources and used to target products and services. Given theimpossibility of analyzing each type of transacting party and transactionfacilitator, it makes sense to explore the privacy issues implicated by this onecommon thread.<2>

The general subject of marketing profiles does not fall squarely within thescope of this paper because, as explained below, such profiles compriseinformation not classified as TRPI. Nevertheless, an examination of marketingprofiles is germane to this paper for two reasons. First, the electronic natureof TRPI makes it inexpensive to access and combine into marketing profiles.Second, as more daily transactions take place on the NII, more TRPI will beavailable to be incorporated into profiles.<3>
I. BACKGROUNDA. Marketing Profiles:  The Heart of Targeted Marketing
Selling personal information is big business. By one estimate, it has risento a $3 billion per year industry and generates more than ten thousand differenttypes of lists,<4> brokered by more than onethousand commercial services.<5>At the heart of this information indus try is the marketing profile. Marketingprofiles are created and used by the private sector to maintain old customersand to target new ones. Companies sift through their internal records ofcustomer purchases—who bought what, when, how often, and for how much—inorder to identify and cater to their most profitable customers.<6> Forexample, certain merchandisers now have computerized marketing profiles in "clientbooks," which give salespeople immed iate access to "the preferencesand sizes of frequent customers.<7>  Usingstatistical modelingtechniques, companies also use their sales records to determine the attributesof the "model customer" most likely to purchase a particular productor service.<8> Actual mar keting profiles arethen compared with thismodel profile to identify those persons warranting solicitation.<9>

To refine this solicitation process, companies enrich their proprietarydatabases with information available from major list-compilers, which maintainsizeable national consumer databases on American households.<10>  Alist-compiler will enrich and analyze the com pany's proprietary personalinformation, develop a profile of the model customer, and identify "profileclones" from its national database as prospective customers.<11> Or,if a company knows exactly what type of person to solicit, the list-compiler canprovide a customized list of names, addresses, and telephone numbers bygeographical site. For example, list brokers have created catalogs of "Arabs,in Their Native Lands, Who Gamble and Invest;" "Doctors Who Are Knownto Have Gambled;" and "Jewish Philanthropists and Investors.<12>
B. Sources of Information for Marketing Profiles
The personal information found in marketing profiles comes from threesources:  public records; internal records—records collected directly fromthe individual by the profiler; and external records—records obtained bythe profiler not directly from the individual but from some third party. 

*Public records* are records collected by the government pursuant tovarious research, licensing, administrative, and adjudicatory schemes, that aresomehow made available for public inspection. Depending on the state, suchrecords could include "census tract data, county assessments, deed transferrecords, electoral records, suits, liens, and judgments, [and] business andprofessional licensing records.<13>  Theymay also include automobileregistration, driver's license registration, birth records, and death records.Finally, they even include the National Change of Address ("NCOA")file, sold by the United States Post Office to those tracking individuals on themove.<14> Public records can reveal volumesabout an individual. Moreover,based on this information, profilers can make educated guesses about othercharacteristics, such as income.<15>

*Internal records* are records collected by the profiler directly fromthe individual. As previously noted, both transacting parties (*e.g.*,clothier) and transaction facilitators (*e.g.*, credit card company) cancollect various forms of TRPI in the course of an NII transaction. Given themarketing value of such information, many profilers analyzing their customersand subscribers are "aiming for 100% information capture" in thecourse of any single transac tion.<16>

Finally, *external records* are records obtained by the profiler notdirectly from the individual but from some third party. These third partiesinclude, for example, social and political organizations; news and entertainmentpublications; and merchandisers that sell their internal records about members,subscribers, and customers to outside profilers. Profilers can obtain externalrecords at different levels of detail. Consider, for instance, the externalrecords that a profiler could obtain from a general clothier in a virtual mall.The profiler could rent a *complete mailing list* of the clothier's entireclientele. Such a list could include only the name and address (e-mail orpostal) of every customer who ever made a purchase. The profiler could also buya customized mailing list of some subset of the clothier's clientele, such asthe names and addresses of customers who have purchased lingerie from theclothier in the last two years. Finally, the profiler could obtain more thanjust names and addresses and obtain *transactional data*, detailingadditional fields of information in the clothier's internal records. This couldinclude, for example, product purchased (*e.g.* large, red, cottonsweater), time and date, and purchase price.

By drawing from all three sources of information—public records,internal records, and external records—profilers may have a detailedmarketing dossier, which includes demo graphic and psychographic information. Aprofile available from a national-list compiler could include:  name, gender,address, telephone number, age, estimated income, household size andcomposition, dwelling type, length of residence, car ownership, pet ownership,responsiveness to mail offers, contributor status, credit card ownership,lifestyle, hobbies, interests, and neighborhood characteristics includingaverage education, house value, and racial composition. This information couldbe added to whatever additional TRPI—revealing specific communications,purchases, services, and other transactions—in a profiler's posses sion.
II. THE PRIVACY ENVIRONMENT A. Legal Environment
The creation of marketing profiles involves first, accessing personalinformation, and second, matching it to a particular individual. Theoretically,legal constraints on the creation of marketing profiles could exist at eachstage of the profile development process.

1. Access

As discussed in the main body of this paper, a patchwork of Federal andstate laws regulate the private sector's access to certain types of personalinformation. Of the three categories of information mined by profilers—publicrecords, internal records, external records—access to *public records* is least restricted. This is because by definition, public records are madeavailable to the public in some form, to serve some public interest such asmaintaining open and accountable government. Nevertheless, access and use ofcertain public records have been somewhat limited despite their "public"nature. For example, various states, such as California, forbid voterregistration rolls from being used for commercial purposes.<17> Anotherimportant example is the recently enacted federal Driver's Privacy ProtectionAct of 1994.<18>

*Internal records* are records collected by the profiler directly fromthe individual in the course of some transaction. The law can restrict aprofiler's access to internal records in two ways. First, it can limitcollection of TRPI to the degree that is functionally necessary. Second, the lawcan require the profiler to purge its internal records after it becomes nolonger functionally necessary to keep.<19>For example, the Cable Actcontains both types of provisions. Even though a cable operator has thetechnological capability to collect more TRPI than is necessary to render cableservice, the Act bars them from taking advantage of that capability, unless itobtains the individual's consent. Second, a cable operator must destroy personalinformation when no longer necessary.<20>

The Cable Act is the exception, not the rule. The law generally does notlimit a profiler's collection of TRPI in the course of transacting with anindividual or facilitating that transaction. Furthermore, the law does notgenerally require profilers to purge their internal records after someestablished period. In sum, the law leaves transacting parties and transactionfacilitators free to collect whatever TRPI they can and to keep whatever information they collect.

The law does put various constraints on profilers from accessing certaintypes of *external records*. Federal and state laws protect to varyingdegrees the confidentiality of certain bank, credit, medical,<21> cable,electronic communications, and videotape rental information. But access to manyother types of external records is unrestricted. Significantly, no Federal lawlimits a profiler's ability to access TRPI held by payment providers, such ascredit card companies. Credit card companies, some of which keep permanentrecords of a cardholder's transactions, "can name each cardholder'sfavorite restaurants and vacation spots, their hobbies and where they shop forgifts.<22>  These companies can compile theinformation from anindividual's credit card purchases—the merchant, the item, the amount, andthe date —and sell it to profilers without federal restrictions.
  2. Matching
Besides access, legal constraints on the creation of marketing profilescould also conceivably be placed on the matching of lawfully obtained data intoa marketing profile. For example, computer matching performed by federalagencies is somewhat regulated by the Computer Matching and Privacy ProtectionAct of 1988 ("Matching Act").<23> In contrast to this restrainton federal government agencies, no regulations govern the way that privatesector profilers may match personal information once it is properly accessed. Inother words, once a profiler legally acquires personal information, the profileris free to sort that informa tion by individual and compile it into a marketingprofile. Indeed, many commenters argued that governmental interference with howprivate parties "match" information legally obtained would infringethe First Amendment.<24>

B. Market Environment

Even though the access and matching of TRPI into marketing profiles are notsubstan tially regulated by law, the "law of the market" maynevertheless prompt adequate self- regulation. As succinctly observed by onecommenter, "companies do not prosper by alienating customers.<25> For instance, market forces have prevented certain marketing profile productsfrom reaching the market. Lotus Development Corporation, a software company, andEquifax, one of the nation's largest credit reporting bureaus, abandoned plansto market a CD-ROM database called "Marketplace: Households" in theface of widespread public criticism.<26>Many commenters pointed to suchincidents as evidence that the mar ketplace protects privacy interestsadequately and that governmental regulation is unneces sary.<27> Further,they cite examples of voluntarily adopted privacy codes that regulate thedisclosure and use of personal information.<28>

Of course, none of these examples suggests that market forces have preventedthe creation and use of marketing profiles. Without question, public records,internal records, and external records are being accessed and matched intomarketing profiles. Indeed, profilers have shown much ingenuity. For example,one way for a merchandiser to acquire more telling internal records is to issuea merchandiser credit card that is co-branded with a national credit card chainsuch as Mastercard or Visa. As provider of the credit card, the merchandiser hascomplete access to the credit card holder's transaction history, including theindividual's shopping history at competing stores. By issuing such credit cards,merchandisers get "a tantalizing glimpse at what its shoppers buy fromrivals.<29>  This information is then used tomarket the card holder forthe merchandiser's own products.

There is evidence, however, that market forces have prevented curiousmembers of the public from accessing marketing profiles. Many list-compilersemphasize that their databases are used only for marketing, not to satisfyanyone's idle curiosity. For instance, it is the official policy of DonnelleyMarketing Inc. and Database America Co., both national list- compilers, not toallow their national consumer database to be accessed for non-business purposes.<30>

Also, comments received by NTIA did not reveal incidents of profilersobtaining external records at the transactional data level of detail. Profilersapparently obtain personal information from third parties in the form of mailinglists—complete or customized—which lack some of the details thattransactional records tend to reveal.<31> Inparticular, the com mentsdescribed no instance in which profilers had official, authorized access totransactional records from payment providers, such as credit card companies. Forexample, American Express and Citibank have adopted policies that prohibit thedisclosure of transactional records to third parties without customer consent,unless such disclosure is required by law.<32> This is not, however, tosay that electronic payment providers disclose absolutely no personalinformation to profilers. For example, both American Express and Citibank sellcustomized mailing lists of cardholders (names, addresses, and telephonenumbers), generat ed by profiling cardholders in-house on the basis of theirpurchases.<33> Depending on howcustomized the list is, it may be nearlyas sensitive as transactional data. 

Besides transaction facilitators such as credit card companies, profilerscan obtain external records from parties that transact directly with theindividual to provide some product or service. These transacting partiesinclude, for example, other merchandisers, mail-order companies, andentertainment and information providers. The comments generated littleinformation about the privacy policies of these varied transacting parties.<34>It is widely known that magazine publishers and book and music clubs often sellinformation about their customers to other merchandise profilers. However, NTIAreceived little comment on how exactly this information is divulged—as acomplete mailing list (*e.g.*, entire clientele of a CD club), customizedmailing list (*e.g.*, classical music buyer), or transactional data (*e.g.*, a particular individual purchased Vivaldi's Four Seasons in a particularmonth).

APPENDIX ENDNOTES
ENDNOTESREPORT:
<1>World Wide Web Computer Home Page of Privacy Rights Clearinghouse,http://www.man ymedia.com/prc (quoting U.S. Privacy Protection Study Commission,1977).

*<2>Smith v. Maryland*, 442 U.S. 735,748 (1979) (Stewart, J.,dissenting). 

<3>The Clinton Administration envisions theNII as "a seamlessweb of communications networks, computers, databases, and consumer electronicsthat will put vast amounts of information at users' fingertips." Information Infrastructure Task Force, U.S. Dep't of Commerce, *The NationalInformation Infrastructure: Agenda for Action*, 58 Fed. Reg. 49,025 (1993)[hereinafter *Agenda for Action*]. Many of the individual components ofthis "network of networks" are in place already, and U.S. companiesare investing more than $50 billion annually to upgrade existing facilities andto construct new ones. The Administration's NII Initiative seeks to developpolicies and programs to spur the evolution of the existing infrastructure intoa network of networks. *See* National Telecommunications and InformationAdministration, *Inquiry on Privacy Issues Relating to Private Sector Use ofTelecommunications-Related Personal Information*, 59 Fed. Reg. 6842, 6842 n.5(1994) [hereinafter *Privacy NOI*].

<4>"*Olmstead v. United States*,277 U.S. 438, 478 (1928)(Brandeis, J., dissenting).

*<5>Privacy NOI, supra* note 3, at 6842n.6 (citing *Public'sPrivacy Concerns Still Rising*, Privacy & Am. Bus., Sept./Oct. 1993, at3).

*<6>See* Larry Tye, *Proposed"Bill of Rights"Would Limit Personal Data*, Boston Globe, Sept. 8, 1993, at 6 (electronicversion).

<7>"Letter from Fred H. Williamson,Chairman, TelecommunicationsInfrastructure Task Force, U.S. Chamber of Commerce, to the NationalTelecommunications and Information Administration (July 12, 1994) (On file atNTIA).

<8>Privacy Rights Clearinghouse, *FirstAnnual Report of PrivacyRights Clearinghouse* 11-14 (Center for Public Interest Law, University ofSan Diego) (Jan. 1994). 

<9>Even a partial list of these ideas includessuch disparate conceptsas:  the privacy of private property; privacy as a proprietary interest in nameand image; privacy as the keeping of one's affairs to oneself; the privacy ofinternal affairs of a voluntary association or of a business; privacy as thephysical absence of others who are unqualified by kinship, affection, or otherattributes to be present; respect for privacy as the respect for the desire ofanother person not to disclose or to have disclosed information about what he isdoing or has done; the privacy of sexual and familial affairs; the desire forprivacy as the desire not to be observed by another person or persons; and theprivacy of the private citizen as opposed to the public official. U.S. Congress,Office of Technology Assessment, OTA- TCT-606, *Information Security andPrivacy in Network Environments* 82 (Sept. 1994) (quoting Edward Shils).

<10>Personal information also includesinformation that is notpersonally identifiable on its face, but identifiable in context. In contrast,aggregate information about society as a whole—its average age, income, orethnic characteristics; its television viewing habits; its consumption patterns—doesnot implicate the reasonable privacy interests of any of its members.

*<11>See* Information InfrastructureTask Force, Privacy WorkingGroup, *Privacy and the National Information Infrastructure: Principles forProviding and Using Personal Information,* Commentary ¶2, (June 1995)[hereinafter *IITF Principles].* Similar definitions of informationprivacy appear in the literature. *See, e.g.*, Alan F. Westin, *Privacyand Freedom* 7 (1966) ("Privacy is the claim of individuals, groups, orinstitutions to determine for themselves when, how, and to what extentinformation about them is communicated to others."); W.A. Parent, *RecentWork on the Concept of Privacy*, 20 Am. Phil. Q. 341, 346 (1983) (Privacy is "thecondition of a person's not having undocumented personal information abouthimself known by others."); Advisory Committee on Automated Personal DataSystems, U.S. Dep't of Health, Education & Welfare, DHEW Pub. No. (OS)73-94,*Records, Computers, and the Rights of Citizens* at xx (July 1973)[hereinafter *DHEW Principles]* ("Concern about computer-based recordkeeping usually centers on its implications for personal privacy, andunderstandably so if privacy is considered to entail control by an individualover the uses made of information about him.").

*<12>See generally* Privacy RightsClearinghouse, *SecondAnnual Report* 28-32 (1995).

<13>Such concerns will also be present withrespect to a "GlobalInformation Infrastructure," or GII, and these issues are already beingaddressed in other parts of the world.  For example, the European Union hasadopted a directive "on the protection of individuals with regard to theprocessing of personal data and on the free movement of such data.  The EuropeanParliament and the Council of the European Union, *Directive of the EuropeanParliament and of the Council on the Protection of Individuals With Regard tothe Processing of Personal Data and on the Free Movement of Such Data*,(Directive 95, 12003/4/94 REV 4) (Brussels 1995).

<14>For example, by following a users'mouse-click patterns and trailsover the Internet, direct marketers can improve their ability to target usersinterested in a specific product. *See* Andy Kessler, *Tracking MouseDroppings*, Forbes ASAP, Aug. 28, 1995, at 67.

Several on-line companies already track and sell information derived from "mousedroppings."  For instance, Internet Profiles Corp. in San Francisco usesits software to track who visits a particular Web site, what is looked at andfor how long. This company sells this information to the relevant Web siteoperator for $5,000 per report. John W. Verity,*Bites & Bytes:  MarketData for Online Advertisers*, Bus. Wk. Aug. 28, 1995, at 72. 

<15>Appendix A discusses privacy issuesrelated to marketing profiles,which are records of an individual's characteristics created by accessingpersonal information from various sources and matching that information to aparticular individual. The Appendix focuses on how merchandisers and nationallist-compilers acquire and process TRPI to create profiles to market productsand services.

*<16>See* Charles Piller, *Privacyin Peril*, MacWorld,July 1993, at 12.

*<17>See**infra* text at Part II(discussing theseprivacy protections).

<18>NTIA, a part of the U.S. Department ofCommerce, is the ExecutiveBranch agency principally responsible for developing and articulating domesticand international telecommunications and information policies. As the principaladviser to the President on these policies, NTIA conducts studies and makesrecommendations regarding telecommuni cations policies, activities, andopportunities, and presents Executive Branch views on telecommunications mattersto the Congress, the Federal Communications Commission (FCC), state and localgovernments, and the public. NTIA was established by Executive Order in 1976.Exec. Order No. 12,046, 3 C.F.R. (1978), *reprinted as amended in* 47U.S.C. § 305 note (1988). Congress codified NTIA's functions in theNational Telecommu nications and Information Administration Organization Act of1992, 47 U.S.C. §§ 901-927 (Supp. V 1993). 

*<19>Privacy NOI, supra* note 3.

<20>Without question, equally importantissues regarding governmentaluse of personal information exist, but those issues have been discussed andanalyzed elsewhere. *See, e.g.*, The Privacy Protection Study Commission,*Personal Privacy in an Information Society* 345- 91 (1977). By contrast,relatively little attention has been paid to the private sector's use ofpersonal information. Partly due to decreasing costs of information processing,the private sector has come to rival the government in acquiring and usingpersonal information. *See*,*e.g.*, John Markoff, *Remember BigBrother?  Now He's a Company Man*, N.Y. Times, Mar. 31, 1991, at E7, ("[N]owmany computer professionals and civil liberties specialists say they fear thatif a Big Brother finally arrives he may be wearing not a police uniform but abusiness suit."). In fact, recent polls indicate that the American publicis concerned about threats to privacy from the private sector as much as fromgovernment. *See* Anne Wells Branscomb, *Who Owns Information?:  FromPrivacy to Public Access* 17 (1994).

<21>The 46 included six local exchangecarriers (LECs), threeinterexchange carriers, 11 information service providers and associationsrepresenting information service providers, 13 private citizens, seven publicinterest groups, two state public utility commissions, the American BankersAssociation, the United States Council for International Business, theIndependent Data Communications Manufacturers Association, and the NationalCable Television Association. For convenience, all subsequent citations to"Comments"shall refer to papers filed in response to NTIA's Privacy NOI.

<22>This paper does not address privacyissues related to the contentsof a communication. Content data is the content of a communication between twoparties. It is information, typically authored or prepared by one party, andsent to another party. By contrast, transactional data is information created inthe course of transmitting content data. Although privacy of content data raisesimportant questions, these questions have been examined, principally in thedebate over law enforcement's ability to intercept digital and encryptedcommunications. *See generally* U.S. Congress, Office of TechnologyAssessment OTA- TCT-606, *Information Security and Privacy in NetworkEnvironments* (Sept. 1994); U.S. Congress, Office of Technology AssessmentOTA-BP-ITC-147, *Issue Update on Information Security and Privacy inNetworked Environments* (June 1995). Less understood is how privacy may bethreatened not by disclosing a communication's contents but by collectinginformation about how individuals will use the NII.

At times, the difference between transactional data and content data may bemeaningless. Consider a movie delivered through a cable system. In some sense,the content data is the signal carried through the cable and deciphered intovideo frames displayed on the television. But from a privacy perspective, thereis no difference between this data and the transactional data that identifiesthe title of the movie.

<23>The Internet is an outgrowth of U.S.government-supported researchand development in networking. It connects millions of computers and users inover 160 countries. People use the Internet to exchange e-mail, browse throughdigital libraries, publish multimedia documents, conduct electronic commerce,participate in video-conferences, and engage in a variety of social activities.*See generally* Ed Krol, *The Whole Internet Users Guide and Catalog* (2d ed. 1994).

<24>"Jeffrey Rothfeder, *Is NothingPrivate?*, Bus. Wk.,Sept. 4, 1989, at 74.

<25>John M. Higgins, *Benefits Hazy forMCI's Murdoch deal*,Multichannel News, May 15, 1995, at 2.

<26>New York Telephone withdrew itsproposal to market its white pagesdirectory database because of a high level of customer opposition. *See*Internal Memorandum from the Communications Division, New York Telephone, to theNew York State Department of Public Service at 2 (July 5, 1990) (on file withNTIA).

<27>Bell Atlantic also withdrew its plans tosell directory listingsto marketers. *See, e.g., Communications Daily*, July 25, 1995 (electronicversion).

*<28>See**Rules and PoliciesRegarding Calling NumberIdentification Service*, Notice of Proposed Rulemaking, 6 FCC Rcd 6752(1992).

Caller ID is a service that enables telephone subscribers to see a callingparty's telephone number. As this paper addresses the commercial use of TRPI andCaller ID is primarily marketed to residential consumers, it does not examinethe privacy issues related to Caller ID.

*<29>See**Rules and PoliciesRegarding Calling NumberIdentification Service - Caller ID*, Report and Order and Further Notice ofProposed Rulemaking, 9 FCC Rcd 1764 (1994).  Order stayed *see Rules andPolicies Regarding Calling Number Identification Service - Caller ID*, 10 FCCRcd 4364 (1995).

Historically, local telephone companies have passed ANI on to long-distancecarriers for routing and billing purposes.  However, recently ANI has beenpassed on to third parties for marketing purposes.

<30>For example, New York's PublicService Commission has also issuedterms and conditions for how ANI is derived and disseminated to parties. *See* Comments of the State of New York, Dep't of Pub. Serv. at App. B.

<31>For a comprehensive review of U.S.privacy statutes, see RobertSmith, *Compilation of State & Federal Privacy Laws* (Privacy Journal1992).

<32>47 U.S.C. § 551 (1990).Personally identifiable subscriberinformation and CPNI are both subsets of TRPI.

<33>The IITF is a Federal inter-agencygroup convened by PresidentClinton to "work with Congress and the private sector to propose thepolicies and initiatives needed to accelerate deployment" of the NII. *See**Agenda for Action*, *supra* note 3, at 49,027.

<34>The President created the NII AdvisoryCouncil (NIIAC) to advisethe Secretary of Commerce, and the Administration, on a national strategy forpromoting the development of the NII. The Council is comprised of individualsrepresenting various interests including industry, labor, academia, publicinterest, and state and local governments. *See* Exec. Order No. 12,864,58 Fed. Reg. 48,773 (1993).

<35>To a certain degree, AT&T isalready competing with MCI onprivacy. Whereas MCI uses information from its customers' "Friends &Family" portfolios to target new customers and present new services, AT&Tadvertises over national television that it does not.

*<36>See* L. Morgan, *High StakesData Gathering RaisesQuery:  How Far Is Too Far?*, St. Petersburg Times, Oct. 2, 1993, at 4B.

*<37>See* B. Moss, *Release ofPhone Records Was Legal, PSCDetermines*, St. Petersburg Times, June 16, 1994, at 4B.

*<38>See**Investigation IntoDissemination of Long DistanceTelephone and Other Customer Records and Related Customer Privacy Issues*,Florida Pub. Serv. Comm'n, Docket No. 931019-TP, Order No. PSC-94-0695-FOF-TP,94 FPSC 6:92 (June 7, 1994).

<39>Telephone and cable companies arealready teaming up to providevideo programming, local, and long-distance telephone service over the samenetwork. For example, Sprint has formed a joint-venture with TCI, Comcast Corp.,and Cox Communications to offer local, long distance, and wireless phoneservice. Martin Rosenberg, *Sprint Cites Ambitious Goal; Boosted by CableAlliance, it Aims to Add a Million Customers*, Kansas City Star, July 14,1995, at B1. Time Warner and AT&T are considering forming a venture to sella full range of phone services through Time Warner's cable system. John Keller,*Time Warner's Cable- TV Unit & AT&T in Talks*, Wall St. J., May16, 1995, at A3. Also, cable companies and Internet Service Providers are makingplans jointly to provide broadband access to the Internet. *See* Leland L.Johnson, *Toward Competition in Cable Television* 46 (1994).

*<40>See**Smith v. Maryland*,442 U.S.735, 748 (Stewart,J., dissenting). 

*<41>See* Comments of GTE at 3;Comments of Bellsouth at 14-16;Comments of Bell Atlantic at 4; Comments of AT&T at 6; Comments ofSouthwestern Bell at 5; Comments of U S West at 3; Letter from Gerald J. Kovach,Senior Vice President, External Affairs, MCI, to Chairman Edward Markey, HouseSubcommittee on Telecommunications and Finance (May 20, 1992), (on file atNTIA).

*<42>See* Comments of BellSouth at14-15; *see also*Comments of U S West at 16 (stating that transactional data is not releasedwithout customer consent); Letter from Gerald J. Kovach, Senior Vice President,External Affairs, MCI, to Chairman Edward Markey, House Subcommittee onTelecommunications and Finance (May 20, 1992) (on file at NTIA) (noting that MCIdoes not sell or rent its customer lists or information about customers to thirdparties).

*<43>See* Pacific Bell, *CustomerPrivacy Guidelines*(Sept. 1993) (brochure).

<44>These principles also commit BellAtlantic to evaluating "potentialprivacy impacts" associated with providing interactive multimedia services.*See* Bell Atlantic Network Services, Inc., *Residential CustomersInformation Privacy Principles* (Jan. 1995) (brochure).

*<45>See* Consumer Affairs, MCITelecommunications, *MCITelecommunications Information Privacy Policy* (Sept. 1995).

<46>Bruce Knecht, *A New Casualty inLegal Battles:  Your Privacy*, Wall St. J., Apr. 11, 1995, at B1.

*<47>See**Telephone Privacy: Hearings Before the Subcomm.on Telecommunications and Finance of the Comm. on Energy and Finance, House ofRepresentatives*, 103d Cong., 1st Sess., 4-5 (1993) (statement of Hon. GeorgeMiller, Cal.) [hereinafter Miller Statement]; *see also* S.T. Parker, *Alyeska"Spy" Witness Heard By House Panel; Committee on Interior and InsularAffairs*, Oil Daily, Nov. 5, 1994, at 1.

*<48>See**Miller Statement,**supra* note 46, at 7.

*<49>See* L. Morgan and E. Wilson,*Anyone Can See Your TollCharges*, St. Petersburg Times, Oct. 1, 1993, at 1B.

<50>A number of States have adopted lawsand regulations regardingdisclosure of CPNI, which generally apply only to intrastate telephone services.For example, California prohibits disclosure of calling records to thirdparties, without the subscriber's prior written authorization. In addition,California also prohibits telephone or telegraph corporations from disclosingthe "services which the residential subscriber purchases from thecorporation or from independent suppliers of information services who use thecorporation's telephone or telegraph line to provide service to the residentialsubscriber."  *See* Cal. Pub. Util. Code sec. 2891 (1995). Similarly,New York and Hawaii adopted privacy provisions covering telephone subscriberinformation in 1994 and 1995. *Sector Reports:  Telecommunications*,Privacy & Am. Bus., May/June 1995, at 21.

<51>"*See**AdditionalComment Sought on Rules GoverningTelephone Companies' Use of Customer Proprietary Network Information,* PublicNotice, 9 FCC Rcd 1685 (1994) *citing**Filing and Review of OpenNetwork Architecture Plans,* 4 FCC Rcd 1, ¶ 403 (1988) [hereinafter *ONAPlans].*

<52>"*ONA Plans* (notinggeneral description given byNYNEX). The FCC clarifies that CPNI does not, however, include creditinformation. *Id*. ¶412.

<53>The FCC has consistently stated overthe years that its CPNI rulesare "intended to balance considerations of efficiency, competitive equity,and privacy."  *Computer III Remand Proceedings:  Bell OperatingCompanies Safeguards and Tier I Local Exchange Carriers,* 6 FCC Rcd 7571, ¶84 (1991) [hereinafter *BOC Safeguards Order].*

<54>The term "Bell companies"as used here refers to theseven Regional Holding Companies formed as part of the divestiture of AT&Tin 1984, and their operating subsidiaries. 

<55>These rules also applied to AT&Tuntil recently. On October12, 1995, the FCC reclassified AT&T as a non-dominant interexchange carrier.This decision frees AT&T from regulations such as the CPNI rules that applyspecifically to dominant carriers. *See**Commission Declares AT&TNon-dominant*, FCC Press Release No. 95-60, Common Carrier Action (Oct. 12,1995).

*<56>BOC Safeguards Order*,*supra* note 53, pt. III.C.For example, the FCC requires the Bell companies and GTE to obtain the priorauthorization of customers with twenty lines or more before disclosing the CPNIof these customers to enhanced service provider (ESP) affiliates. No priorauthorization is required for customers with fewer than twenty lines, nor is anyprior authorization required—regardless of the number of customer lines—forCPNI disclosures to Bell companies and GTE customer premises equipmentaffiliates. *Id.* at ¶ 89. 

<57>For this discussion, "videocarriage" includes allcommunications services that transmit television-like content through wirelineand wireless technologies.

<58>Of course, television broadcasts alsotransmit video programming.There have been no privacy concerns, however, associated with thiscommunications service because so far TRPI has not been collected about anindividual's television viewing patterns—except for those cases in which anindividual agrees to record his or her viewing for a survey company in exchangefor consideration.

*<59>See* Michael Decourcy Hinds,*Personal But NotConfidential:  A New Debate Over Privacy*, N.Y. Times, Feb. 27, 1988, at 56.

*<60>See**Video and LibraryPrivacy Protection Act of 1988: Joint Hearing on H.R. 4947 and S. 2361 Before the Subcomm. on Courts, CivilLiberties, and the Administration of Justice of the Senate Comm. on theJudiciary*, 100th Cong, 2d Sess. 80, 84 (1988) (testimony of Vans Stevensonfor the Video Software Dealers Association and Erol's Inc.).

*<61>See* 18 U.S.C. §2710(b)(1) (1988).

*<62>See id.* §2710(b)(2)(D)(i). Disclosures "incidentto the ordinary course of business of the video tape service provider" arealso permitted. *Id.* § 2710(b)(2)(E).

*<63>See id.* §2710(b)(2)(D)(ii).

*<64>Id.*§ 2710(e). The VideoAct also has specificprovisions governing governmental access to video tape records, *see id.* §2710(b)(2)(C), as well as court ordered requests in a civil proceeding, *id.* § 2710(b)(2)(F). States have passed similar video tape laws. *See,e.g.*, Cal. Civ. Code § 1799.3 (West 1995); Del. Code Ann. tit. 11, §925 (1994).

*<65>See* 47 U.S.C. § 551(a)(1988 & Supp. V 1993).Among other things, such notice must state the nature of the personalinformation collected and its use; the nature, frequency, and purpose ofdisclosures; the length of time the information is kept; times and places wherethe subscriber may have access to the stored information; the legal limitationsof the service operator; and the enforcement rights of the subscriber. *Seeid*. Federal case law has established a sufficiency test for notice similarto that used in a Truth In Lending Act analysis. *See Scofield v. Telecableof Overland Park, Inc.*, 973 F.2d 874, 879 (10th Cir. 1992). "Clear andconspicuous" notice (as required under the Cable Act) must provide "meaningfuldisclosure" which is essentially "warn[ing] an ordinary subscriber ofpractices that materially affect his privacy interests."  *Id.* at880. Perfect disclosure is not required, rather, only that which is reasonable.*Id.*

*<66>See*47 U.S.C § 551(b)(2)(1988).

*<67>Id.*§ 551(c)(2)(A).

*<68>See id.*§§551(b)(1), 551(c)(1) (1988 &Supp. V 1993). The exceptions include disclosure of information pursuant to acourt order, *see id.* §§ 551(c)(2)(B), 551(h); disclosure ofmailing list information (names and addresses) if the individual had a prioropportunity to prohibit such disclosures, *see id.* §551(c)(2)(C)(i); *and* the disclosure that does not reveal, evenindirectly, the subscriber's viewing habits or use of the service *or* anynature of a subscriber's transactions over the service. *Id.* §551(c)(2)(C)(ii).

*<69>See id.* § 551(e) (1988).States have passed similarcable privacy laws. *See, e.g.*, Cal. Penal Code § 637.5 (1995);Conn. Gen. Stat. Ann. § 53-421 (1994); Ill. Ann. Stat. ch. 38, para. 87-2(1995); and Wisc. Stat. Ann. § 134.43 (1994).

<70>Furthermore, it is not clear whethervideo carriage providerscould be considered "video tape service providers" within the meaningof the statute. The Act defines "video tape service providers" as anyperson engaged in the "rental, sale, or delivery of prerecorded videocassette tapes or similar audio visual materials." 18 U.S.C. §2710(a)(4) (1988).

<71>Commenters to the Privacy NOIconcurred with this interpretation.*See, e.g.*, Comments of Time Warner at 11; Comments of Bell Atlantic at8; Comments of Southwestern Bell at 12-13; Comments of AT&T at 13-14.

Although commenters argued that the Video Act does not apply to serviceproviders that distribute video over telecommunications networks, somerecommended that similar privacy provisions be applied to such services sincethere is little difference between renting a video from a store and ordering toview it over a communications network. *See* Comments of MCI at 12-13;Comments of National Cable Television Association at 5-6. 

*<72>See**Definition of a CableTelevision System*, 5 FCCRcd 7638, 7638 (1990) ("[T]he term cable system as used in the [Cable] Actencompasses only video delivery systems that employ cable, wire, or otherphysically closed or shielded transmission paths . . . . [D]irect broadcastsatellites and so-called `wireless cable' . . . are not cable systems.").

*<73>See**NCTA v. FCC,* 33F.3d 66, 71 (1994). To be a "cableoperator," an entity must engage in the "transmission" of videoprogramming. *See* 47 U.S.C. §§ 522 (5),(6) (1988). In*NCTA*, the court upheld the FCC's determination that "transmission"requires "active participation in the selection and distribution of videoprogramming."  *NCTA*, 33 F. 3d at 71, 73 (quoting FCC Order). LECsserving purely as common carrier conduits would thus not be transmittingprogramming. 

Although LECs providing video programming might not be subject to the CableAct's subscriber privacy provision, GTE and the Bell companies would still besubject to the FCC's CPNI rules. *See**Telephone Company-CableTelevision Cross-Ownership Rules, Sections 63.54-63.58* 10 FCC Rcd 244 ¶239 (1994).

<74>In comments to the FCC, NTIA hasargued that when a LEC offersvideo programming via a VDT platform, the LEC should not be deemed a "cableoperator."  *See* Comments of NTIA *in* CC Docket No. 87-266,at 22-28 (filed July 11, 1995).

<75>As of 1994, approximately 300 regionaland national ISPs offeredindividuals access to the Internet at various levels. ISPs can provide dedicatedaccess, which may involve leasing a dedicated telephone line and installing anInternet routing computer at the individual's site. ISPs can provide softwarethat allows individuals to connect their home computers to office, university,or private time-sharing networks that have dedicated access to the Internet. Inaddition, many on-line services, which principally provide information productsand discussion fora to subscribers, have gateways to communicate via theInternet. The distinction between ISPs and on-line services is dissolving asISPs provide more information products and as on-line services provide lessrestricted access to the Internet through their gateways. *See* Ed Krol,*The Whole Internet* 456-66 (2d ed. 1994).

<76>For example, CompuServe sells mailinglists to third-parties "broadlybased on member segments or selections," *Communications Daily*, Oct.25, 1994, at 3 (electronic version), making available "interest categorieswhich represent the on-line use of CompuServe members."  *Id*.(quoting Direct Media, list-compiler). Similarly, America Online sells personalinformation about its subscribers:  name, address, [and] *type of customer*.*Communications Daily*, Oct. 26, 1994, at 4 (electronic version)(emphasis added). Both America Online and CompuServe allow individuals toopt-out of such mailing lists. *See* text at Part III (analyzing opt-inand opt-out schemes).

In contrast, Prodigy has a policy of not disclosing any personal informationabout its subscribers to third-parties. Prodigy Services Co., *Policy onProtecting Member Privacy* (on file at NTIA). In addition, Apple Computer,Inc. (AppleLink, Eworld), Delphi Internet Services Corp., New York TimesService/Syndication, ProductView Interactive, and Dow Jones & Co., Inc.,have internal policies prohibiting release of personal information to thirdparties. *See Communications Daily*, Oct. 26, 1994 (electronic version).

<77>18 U.S.C. § 2511(3)(a) (1988).The ECPA forbids a provider of"electronic communication service to the public" to "intentionallydivulge the contents of any communication . . . while in transmission on thatservice" to any unauthorized entity. *Id*. The term contents "includesany information concerning the substance, purport, or meaning of thatcommunication."  The ECPA, however, makes clear that "contents"do not include "the identity of the parties or the existence of thecommunication." § 2510 (8). The ECPA allows providers to "disclosea *record* or other *information pertaining to a subscriber*. . .not including the*contents* of communications" to anynongovernmental entity. *See* 18 U.S.C. § 2703(c)(1)(A) (1988)(emphasis added). The ECPA does not explicitly define "record" and, todate, no court has interpreted this term. Thus, it is an unsettled question oflaw whether information, such as the subject line of an e-mail message or thetitle of video programming viewed, qualifies as "content" or merely asa transactional "record."  

A strong argument may be made that by transaction records, Congress meantnothing more than information that reveals the origin, destination, andexistence of a communication. The legislative history of the ECPA reveals thattransactional records were left out of the definition of contents in order toharmonize the statute with Fourth Amendment jurispru dence that left callingrecord information unprotected. *See* S. Rep. No. 541, 99th Cong., 2dSess., 13 (1986), *reprinted in* 1986 U.S.C.C.A.N. 3555, 3567. ("TheSupreme Court has clearly indicated that the use of pen registers, *i.e.*calling records associated with telephone service, does not violate eitherchapter 119 of title 18 or the fourth amendment. [This section] of thislegislation makes that policy clear."). *See also* Office ofEnforcement Operations, Criminal Division, U.S. Dep't of Justice, *Analysisof the Electronic Communi cations Privacy Act of 1986, Public Law No. 99-508* (Dec. 15, 1986) ("In electronic communications [transactional records]are the records that are the equivalent of the traditional telephone tollrecords maintained by a telephone company."). Based on this interpretation,from a privacy point-of-view, there may be no meaningful difference between, forexample, the contents of a communication and transactional data that identifiesthe title or the specific nature of the communication.

*<78>See* Mark Berniker, *BellsClose Disney Video ServicesDeal*, Broadcasting & Cable, Apr. 24, 1995, at 34.

<79>Many cable operators are currentlyrestructuring their networks todeliver a variety of services. These services range from traditional one-waymulti-channel video programming to telephony, to higher-speed access to remotedatabases, and using these networks as the backbone for various wirelessservices. *See* Interview with Amos Hostetter, Chairman/CEO of ContinentalCablevision, *The Once and Future Cable,* Broadcasting and Cable, May 8,1995, at 33.

In October 1994, Time Warner introduced the first switched, digitalinteractive, multimedia network, called the Full Service Network (FSN) inOrlando, Florida. An existing coaxial cable network in Orlando was upgraded withfiber-optic technology to develop this FSN. In addition, high capacitymulti-access digital storage systems-servers were added to facilitate thetransactions of multiple customers simultaneously, and a form of high speedswitching called asynchronous transfer mode (ATM) technology was added to routedigital, video, voice, or computer data from digital libraries to individualhomes. Eventually, Time Warner hopes to use this network to bring a host ofservices to consumers' homes including:  access to libraries, distance learning,news-on-demand, long distance telephone access, banking and other financialservices, driver's license renewal or tag registration, grocery and drugstoreshopping, medical imaging, high-speed data transport for business, videoconferencing, HBO-on-demand, sports-on-demand, and music-on-demand. Time WarnerCable, Full Service Network, *Background:  Time Warner Introduces World'sFirst Full Service Network in Orlando* (May 1995). 

<80>Cable service refers to videoprogramming similar to currenttelevision broadcasts. *See* 47 U.S.C. § 522(6)(a)(b) (1988). Limitedsubscriber interaction is included in "cable service," but only to theextent of selecting video programming from a menu typical of pay-per-view.Interactive multimedia services may not be considered a "cable service"because they do not resemble today's one-way video programming and involve ahigh level of subscriber interactivity.

<81>"Presently, more than 111 millionAmericans rely upon theconvenience and diversity of products when shopping by phone or mail. Because ofdirect response marketing, consumers can select from thousands of essential,hard-to-find products and services in the comfort of their living rooms." Comments of the Direct Marketing Association at 4.

<82>".*IITF Principles,**supra* note 11, atCommentary ¶ 4. 

*<83>IITF Principles,**supra*note 11. Those principlesbegin with the Information Privacy Principle, which states:  "Personalinformation should be acquired, disclosed, and used only in ways that respect anindividual's privacy."  *Id*. at Commentary sec. I.A. The remainingprinciples create a framework that places rights and responsibilities onindividuals and information users so that the Information Privacy Principle issatisfied.

*<84>IITF Principles,**supra*note 11, at Commentary sec.II.B. *See also*Organization for Economic Co-operation and Development,*Guidelines on the Protection of Privacy and Transborder Flows of PersonalData,* Purpose Specification Principle at 10 (Paris 1981) [hereinafter *OECDGuidelines* ("The purposes for which personal data are collected shouldbe specified not later than at the time of data collection . . . .").

<85>An important corollary to the NoticePrinciple is the FairnessPrinciple, which insists that information users keep their promise to theindividual by abiding by the terms set out explicitly in their notice, or, inthe absence of notice, by respecting the individual's reasonable contemplationof how personal information will be used. *See**IITF Principles,**supra* note 11, at Commentary sec. II.D. *See also**OECDGuidelines,**supra* note 84, Use Limitation Principle at 10 (statingthat "Personal data should not be disclosed, made available or otherwiseused for purposes other than those specified in accordance with [the PurposeSpecification Principle] except with the consent of the data subject or by theauthority of law."). Indeed, the Notice Principle would amount to mereformalism if information could be used in ways completely divergent from theindividual's understanding.

<86>In a limited number of circumstances,merely notifying a customerof a company's policies and practices with respect to TRPI will not be enough.For example, when a prospective customer's primary language is not English, itis incumbent on the service provider to take steps to ensure that notice is notmerely given but understood.

<87>Similarly, provisions under the pendingHouse telecommunicationsreform legislation, H.R. 1555, would prohibit carriers from disclosing or usingCPNI for purposes other than to provide a particular service, without subscriberpermission. 

<88>Recognizing that privacy is a"core value in modern society,"Microsoft developed a set of principles for how customer information isgathered, processed, used and stored over its on- line Microsoft Network (MSN).These principles include provisions for notifying subscribers about howinformation about them will be collected and used and imposes limitations on howinformation can be used by MSN content providers. For example, a contentprovider may be asked "to specify the legitimate business purpose forgathering information from a Member and to provide that Member with theopportunity to opt-out of the processing or use of that information for directmarketing purposes."  MSN, The Microsoft Network,*Summary of Principleson Gathering, Processing, Using and Storing Member Information* (July 1,1995).

<89>A company should generally not berequired to provide itscustomers with recurrent notices about its privacy policies. Such requirementswould merely impose costs on businesses— most of which may be passed on toconsumers. Thus, after the first notice has been given, a company should provideadditional notices only if there has been a change in its privacy policies andpractices.

<90>DMA has produced industry guidelinesfor "Ethical BusinessPractices," "Personal Information Protection," "TelephoneMarketing," "Acceptance of Print Advertising," "Mailing ListPractices," "Broadcast Advertising," and a "Fair InformationPractices Checklist."  Comments of DMA at 5-6.

<91>DMA Guidelines for PersonalInformation Protection, Art. 5 *in* Direct Marketing Association, Inc., *Fair Information Practices Manual: A Direct Marketer's Guide to Effective Self-Regulatory Action in the Use ofInformation* (Oct. 1994) [hereinafter *Fair Information Practices Manual].* This document provides direct marketers with information about how toimplement corporate fair information policies and how to comply to these self-regulatory programs. DMA has received approximately 1,000 requests from industryfor this manual since its release.

<92>DMA Guidelines for Ethical BusinessPractice, Art. 32 *in**Fair Information Practices Manual*.

<93>"Comments of Time Warner Inc.at 6. The five basic principlesof this code are:  1) Personal data record-keeping practices should not be keptsecret; 2) Individuals should have the ability to find out what informationabout them is on record and how it is disclosed; 3) Individuals should be ableto correct or amend records of identifiable information about them; 4)Individuals should be able to limit the disclosure of information about themthat was obtained for one purpose from being disclosed for other unrelatedpurposes; and 5) An organization creating, maintaining, using, or disseminatingrecords of identifiable personal data must guarantee the reliability of the datafor their intended use and must take precautions to prevent misuse of the data.*Id.* at 4-5; *see also**DHEW Principles*, *supra* note11.

<94>"Congress grappled with this veryissue with respect totelemarketing sales calls before passing the Telephone Consumer Protection Actof 1991, which, among other things, requires telemarketers to consult a list ofpersons who do not wish to receive telephone sales calls and prohibitstelemarketers from calling them. *See* 47 U.S.C. §227. In the end,Congress chose to balance the concerns of an emerging industry and consumers bydeciding in favor of an opt-out approach and establishing a nationalclearinghouse that would maintain a list of consumers who did not wish to becalled. *Id.*

<95>"Comments of Bell Atlantic at 4.*Cf*. Comments of AT&Tat 9-10; Comments of Time Warner Inc. at 12; and Comments of The NewspaperAssociation of America at 2, 3-4 (all favoring an opt-out approach).

*<96>See* Comments of TRW Inc. at11-12.

<97>Louis Harris and Associates, Inc.,*Interactive Services,Consumers, and Privacy:  A National Survey* 94 (1994). However, this samegroup expressed privacy concerns. For example, 60% indicated that they wouldlike to be fully informed about a provider's collection of subscriber profileinformation before deciding to subscribe to its services; 74% indicated thatthey would like to review the information in their profile, correct errors, andindicate which sets of information they would allow to be used for marketing.*Id.* at 95. 

<98>The distinction between sensitive andnon-sensitive data is notclear-cut; information that is sensitive to one person may be innocuous toanother. Although NTIA does not suggest a definitive answer to this question, wedo believe that information relating to health care (*e.g.*, medicaldiagnoses and treatments), political persuasion, sexual matters and orientation,and personal finances (*e.g.*, credit card numbers) should be considered"sensitive." The same is true for an individual's social security number, which has become auniversal personal identifier, a passkey that allows the holder to unlock andaccumulate the vast storehouse of information on most people that is availablefrom a host of different databases.

*<99>See generally*Comments of TheConsumer Interest ResearchInstitute at 8.

<100>The IITF Fairness Principle statesthat "the nature of theincompatible use will determine whether such consent should be explicit orimplicit. In some cases, the consequences to an individual may be so significantthat the prospective data user should proceed only after the individual hasspecifically opted into the use by explicitly agreeing."  *See**IITFPrinciples,**supra* note 11, at Commentary ¶ 22.

<101>"*See* Comments ofTime Warner at 12.

<102>The IITF's Education Principle alsorecognizes the importance ofenhanced consumer education. *See**IITF Principles,**supra*note 11, at Commentary sec. II.E.

<103>A report conducted by the staff ofthe House Subcommittee onTelecommunications and Finance found that Bell Atlantic-Maryland had undertakenefforts to educate its customers about how to avoid unwanted intrusions fromtelemarketers through billing statements. *See*Letter from Edward J.Markey, Chairman, Subcommittee on Telecommunications and Finance, U.S. House ofRepresentatives, to Mr. Sam Ginn, Chairman and CEO of Pacific Telesis Group(July 14, 1994) (on file at NTIA).

Pacific Telesis Group has also taken a number of steps to educate itsconsumers about avoiding unwanted telemarketing sales calls. For instance,Pacific Telesis Group's subsidiaries—Pacific Bell and Nevada Bell—includea "Consumer Rights and Information" section in their directories andbill inserts which describe how consumers can handle telephone sales calls. A24-Hour Customer Guide Information Line also offers audiotext messages about howto use the phone, including information on how to "reduce sales calls."*See* Letter from P.J. Quigley, Chairman, President and Chief ExecutiveOfficer, Pacific Telesis Group, to Hon. Edward J. Markey, Chairman, Subcommitteeon Telecommuni cations and Finance, U.S. House of Representatives (June 26,1995) (on file at NTIA). 

<104>The Privacy Rights Clearinghouserecommends in its comments thatconsumer education, among other things, should include "plain languagedescriptions of how new technologies affect privacy, explanations of consumers'legal privacy rights, [and] guidelines for effective consumer-privacy practices." *See* Comments of the Privacy Rights Clearinghouse at 3.

APPENDIX ENDNOTES:
<1>Metromail, *The New Marketing: Selling in the Age of theIndividual* 7 (1994) (brochure).

<2>The privacy issues associated withcommunications providers, whichhave already been discussed, are not revisited here. Profiles used to determinewhether an individual receives consumer credit is governed by the Fair CreditReporting Act of 1970, 15 U.S.C. §§ 1618a - 1681t (1988). Suchprofiles are also outside the scope of this appendix.

<3>Not all personal profiles are compiledfor marketing purposes.Certain profiles are created, for example, to aid private investigators, media,and lawyers in search of missing individuals and their assets. *See*Teresa Pritchard-Schoch & Susan Hutchens,*Remote Access to PublicRecords:  An Update*, Database, Feb. 1994, at 14.

*<4>See* Jill Smolowe, *ReadThis!!!!!!!!*, Time, Nov. 26,1990, at 62, 66 (referring to the*Direct Mail List Rates and Data*published by the Standard Rate & Data Service). An average person appears onone hundred mailing lists and fifty databases. *See* Anne Wells Branscomb,*Who Owns Information?:  From Privacy to Public Access* 11 (1994).

*<5>See* Charles Piller, *Privacyin Peril*, MacWorld,July 1993, at 8, 11 (describing contents of the Burwell Directory of InformationBrokers).

*<6>See* Laura Bird, *DepartmentStores Target Top Customers*, Wall St. J., Mar. 8, 1995, at B1 ("Such department stores asBloomingdale's, Nordstrom and Saks Fifth Avenue are starting to tap their vastcustomer databases to identify their most profitable shoppers.").

<7>"*Id.*

*<8>See* David Zielinski,*Database:  the Heart ofRelationship Marketing*, 27 Potentials in Marketing 66 (1994); Jonathan P.Graham, Note, *Privacy, Computers, and the Commercial Dissemination ofPersonal Information*, 65 Tex. L. Rev. 1395, 1401 (1987) (discussing howcomputers are used to produce "psychographics"—psychologicalprofiles of consumers) (emphasis added).

*<9>See generally* Jonathan Berry,*Database Marketing*,Bus. Wk., Sept. 5, 1994, at 56-61.

<10>For example, the consumerinformation database of DonnelleyMarketing Inc. contains "consumer data on over 150 million individuals and90 million households."  Donnelley Marketing Inc., *Donnelley MarketingInc. Consumer Information* 1 (brochure). Metromail advertises a database of133 million people. *See* Metromail, *supra* note 1.

<11>"Companies can now buy listsof customers who have boughtproducts similar to their own, or who share characteristics, and merge them withother databases giving further information on the individuals named."  AlanShipman, *Scanned and Deliver:  Mailshot Marketing*, 49 Int'l Mgmt. 27(1994).

<12>"*See* Bill Granger,*The Name Traders*, Chi.Trib., Nov. 15, 1992, (Magazine), at C22.

<13>"Comments of Mead DataCentral, Inc. and Dun & BradstreetCorp. at 3.

<14>Until recently, the Post Officereleased Change of Addressinformation for a particular person to anyone for a $3 fee. In 1994, the PostOffice discontinued that practice. However, the Post Office continues to sellthe entire NCOA (principally to mass mailers). Representative Gary Condit hasintroduced the "Postal Privacy Act of 1995," H.R. 434, 104th Cong.,1st Sess. (1995), which would require notice and opt-out for NCOA forms. 

<15>Income is often estimated on thebasis of census neighborhoodinformation, real property records, and vehicle registration.

*<16>See* Bird, *supra* note6, at B1.

*<17>See* Rick Wartzman,*Information, Please:  A ResearchCompany Got Consumer Data from Voting Rolls*, Wall St. J., Dec. 23, 1994, at1 (referring to Cal. Elections Code § 2194 (Deering 1994)).

*<18>See* 18 U.S.C.§§ 2721-2725 (1988 & Supp. V1994).

<19>47 U.S.C. § 551(b), (e)(1988& Supp. V 1993). Similarly,the Video Privacy Protection Act of 1988 requires the destruction of "personallyidentifiable information as soon as practicable, but no later than one year fromthe date the information is no longer necessary for the purpose for which it wascollected . . . ."  18 U.S.C. § 2710(e)(1988 & Supp. V 1994).

<20>47 U.S.C. § 551(b), (e) (1988& Supp. V 1993).

*<21>See, e.g.*, N.Y. Pub. HealthLaw § 17 (Consol. 1994)(records of sexually transmitted disease or abortion for a minor cannot bedisclosed, even to parent).

<22>"John Healy, *Just BetweenUs*, Cong. Q., May 14, 1994,at 41.

<23>5 U.S.C. § 552a(o)-(q)(1988). The Computer Matching andPrivacy Protection Act of 1988 (Pub. L. No. 100-503) has amended the Privacy Actto add several new provisions. See 5 U.S.C. § 552 (a)(8)-(13), (e)(12),(o), (p), (q), (r), (u), (1988 & Supp. V 1993). These provisions addprocedural requirements for agencies to follow when engaging incomputer-matching activities; provide matching subjects with opportunity toreceive notice and to refute adverse information before having a benefit deniedor terminated; and require that agencies engaged in matching activitiesestablish Data Protection Boards to oversee those activities.

More recently, Congress enacted the Computer Matching and Privacy ProtectionAmendments of 1990 (Pub. L. No. 101-508), which further clarify the due processprovisions found in subsection (p). Office of Information and Privacy, U.S.Dep't of Justice, *Freedom of Information Act Guide & Privacy ActOverview* 458-59 (Sept. 1994).

<24>Various commenters assert thatgovernmental restrictions on thecreation of personal profiles could infringe the profilers' First Amendmentrights. *See* Comments of Mead Data Central, Inc. and Dun & BradstreetCorporation at 9-23; Comments of Information Industry Association at 8-10.

<25>"Comments of Time WarnerInc. at 17. 

<26>The proposed data base would havecontained such personalinformation as the name, sex, age, estimated income, purchasing habits, andmarital status of 120 million Americans. *See* Piller, *supra* note5, at 11 (noting that Equifax received 30,000 angry letters from consumersprotesting Marketplace plan); *See also* Daniel Mendel-Balck & EvelynRichards, *Peering into Private Lives*, Wash. Post, Jan. 20, 1991, at H1.

*<27>See* Comments of GTEServices Corp. at 3 (existing businessrelationship between customers and service providers naturally provides privacysafeguards); Comments of AT&T at 8 (stating "Firms operating incompetitive markets *must* honor reasonable customer expectations ofprivacy in the use of individually-identifiable information, or risk losingcustomers to competitors who are willing to respect and fulfill thoseexpectations."); Comments of Southwestern Bell at 3 (stating that "Ifa company violates the expectations of its customers, over time that company isunlikely to continue [the] commercial relationship..."); Supp. Comments ofDirect Marketing Association at 9 (noting that DMA fully appreciates thatindustry cannot thrive without consumer confidence and trust and "did notbecome a multi-billion dollar industry in the era preceding the NII by ignoringits customers.").

*<28>See generally**Privacyand American Business, Handbookof Company Privacy**Codes* 20 (1994) (hereinafter *Privacy andAmerican Business*) (compiling industry codes); Direct Marketing Association,*Fair Information Practices Manual:  A Direct Marketer's Guide to EffectiveSelf-Regulatory Action in the Use of Information (1994)*.

<29>"Bird, *supra* note 6, atB12. 

*<30>See* Telephone Conversationwith Harry Kitchen, Director ofDatabase Analysis at Donnelley Marketing, Inc., September 29, 1994; Letter fromPaul Sobel, Senior Vice President, Database America Companies, to Jerry Kang(Oct. 11, 1994) (explaining that its software is not configured to answerqueries about specific individuals) (on file at NTIA).

In contrast, marketing profiles maintained by companies such as Lexis/Nexis—whichcontain personal information derived principally from public records—can beaccessed by anyone who can afford the on-line charges. Another company, AmericanInformation Network, Inc., acts as an electronic information broker that cansupply, among other information, criminal, driving, credit, motor vehicle, andproperty records. Also offered are license plate searches, national socialsecurity number locators, national address locators, workers' compensationrecords, and state corporate records. In addition, with increasing amounts ofpublic record and other information available on-line, it has become easier tocompile public record profiles by oneself. *See* Pritchard-Schoch &Hutchens, *supra* note 3, at 14 ("Approximately 90% of the nation'smillions of public records are not yet accessible remotely . . . . Nonetheless,the market for online access to public records continues to experience steadygrowth, especially due to the demands of insurance companies, law firms, privateinvestigators, and financial institutions.").

<31>For example, the industryadvertisements and promotional materialsof major list- compilers suggest that while they may know whether an individualholds a major credit card or not (by getting complete lists from credit cardcompanies), they do not know what specific purchases have been made with thatcredit card. Similarly, although major list-compilers may know whether anindividual subscribes to magazines (by getting complete lists from publishers),they do not seem to know which particular magazines one orders. Finally,although they may know whether an individual has made political contributions,they do not seem to know to whom, when, and how much.

*<32>See**Privacy andAmerican Business,**supra*note 28, at 20 ("We will release individual information about directAmerican Express customers only if the customer has consented . . . or when weare required to do so by law . . . ."); Citibank states that it "willnot reveal specific information about a customer transaction (what, where, when,how much) to third parties except as previously disclosed to the customer in anycommunications and agreements." *Id.* at 27.

<33>In its "Privacy Notice toCardholder" American Expressstates:  "We [American Express] try to make sure that [promotional] offersreach only those card members most likely to take advantage of them. To do this,we develop lists for use by us and our affiliates based on information youprovided on your initial application and in surveys, information derived fromhow you use the Card that may indicate purchasing preferences and lifestyle, aswell as information available from external sources including consumer reports.We may also use that information, along with non-credit information fromexternal sources, to develop lists which are used by the companies with whom wework."  *Privacy and American Business,* supra note 28, at 16.

Citibank's notice contains a similar message: "If we [Citibank] find aproduct or special offer that we think would be of interest to you, we work withthe companies involved to let you know by mail or phone." *See id.*at 24; *see also* Jeff Smith, *Privacy Polices and Practices*, 36Comm. of the ACM 104 (1993) (describing one credit card company in its surveyused "cardholders' purchases to create psychographic purchasing profiles").

<34>Commenters provided someinformation about an important source ofTRPI—national on-line services. Two major on-line services—AmericaOnline and CompuServe— disclose personal information in the form ofcustomized mailing lists created by profiling their subscribers on the basis ofthe transactions they make on-line. Compuserve sells mailing lists tothird-parties "broadly based on member segments or selections,"Communications Daily, October 25, 1994, at 3 (electronic version), makingavailable "interest categories which represent the on-line use ofCompuServe members."  *Id.* (quoting Direct Media, list-compiler).Similarly, America Online sells personal information on its subscribers:  name,addresses, [and] *type of customer*. Communications Daily, October 26,1994, at 4 (electronic version) (emphasis added). Both America Online andCompuserve allow individuals to opt-out of such mailing lists.

In contrast, Prodigy has a policy of not disclosing any personal informationabout its subscribers to third-parties. Prodigy Services Co., *Policy onProtecting Member Privacy* (on file at NTIA). In addition, Apple Computer,Inc. (AppleLink, Eworld), Delphi Internet Services Corp., New York TimesService/Syndication, ProductView Interactive, and Dow Jones & Co., Inc.,have internal policies prohibiting release of personal information to thirdparties. *See*Communications Daily, October 26, 1994 (electronicversion).**

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