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Hearing of the Senate Committee on Commerce, Science and Transportation - S. 1963, The Wireless 411 Privacy Act

Location: Washington, DC

Federal News Service










TIME: 2:30 P.M.

SEN. GEORGE ALLEN (R-VA): Good afternoon. I call this hearing to order. Senator Specter was to be in the first panel, so to speak. If he doesn't get here on time, we're going to go straight to the panel. And I know that we have many witnesses we want to hear from. So I'll make an opening statement, allow Senator Boxer to have an opening statement. In the event that Senator Specter appears, he can make a statement. If not, we will proceed to the witnesses who have come here.

And thank you for being with us today.

We are examining in this committee Senate Bill 1963, the Wireless 411 Privacy Act which is sponsored by Senators Specter and Boxer. As many of us are aware and everyone clearly in this room is aware that there are more wireless telephone users now than any time in history. There are over 160 million in the United States. Wireless phone service has proven valuable to millions of Americans because of its mobility, because of its service quality, its coverage and its reliability.

I've personally gone around Virginia in an RV with a laptop getting Internet coverage through Verizon. It's not just theory. It was great. Places where-didn't have BlackBerry coverage and even kind of weak cell phone coverage, to be honest with you, in some cases. So it was great to be able to access information. Congressman Largent would appreciate I was on getting play-by- play of my brother's pre-season game and that coverage is, of course, very important to a few people. But certainly Congressman Largent understands what's important in the real world.

I will say, Senator McCain posed questions too, I believe, five or six of the top wireless carriers, questions on this issue. Those questions have been responded to by those companies and they are from Singular, Verizon Wireless, Sprint, Verizon, T-Mobile. That's it.

At any rate, the questions and the answers will be made a part of the record. The facts, as we proceed in this hearing-and the facts, I think, are going to be pretty clear. But according to the Cellular Telecommunications and Internet Association, there are more than 180 wireless service providers competing in the United States, which means that's great for consumers. Approximately 93 percent of all Americans live in markets that are served by four or more wireless providers and nearly 98 percent of Americans live in a market that is served by three or more providers.

Now, by all accounts, the wireless industry is intensely competitive and that competition continues to bring extraordinary benefits to consumers. According to the FCC, cell phone use, in terms of minutes, has increased by 22 percent per consumer while service costs fell by 13 percent. Overall, when you see this sort of a situation, consumers are the ultimate winners in a competitive marketplace, which enables them to determine for themselves or their businesses what they value and what they don't value, when it comes to their mobile phones.

More recently, wireless customers, both residential and businesses, have indicated a desire to make their wireless telephone number available through directory assistance. To meet this consumer demand, the wireless industry is considering offering wireless directory assistance services or 411 or 4-1-1, whichever way you want to say that. At the same time, there are efforts to create a nationwide directory. And that, in doing so, has raised privacy concerns for consumers who don't want people calling them up and want to keep their phone numbers private. And that is one of the benefits of cell phones and some people's desires.

Now today's hearing is to examine those privacy concerns and what the industry is actively considering to address them, what they're going to be providing and not all will be providing directory assistance. Some may. But, at any rate, look at the scope of it, what is being planned and what will be available to customers. Now, generally speaking, I think each company in the free market system ought to be able to make a decision to provide a wireless directory for itself based on its own individual assessment of what its customers and general marketplace demands.

Likewise, I believe that each customer should have the freedom to make this decision for himself and herself based on their power to select the carrier they want for their particular needs or preferences. I don't think it is necessarily mutually exclusive that either you have directory assistance through a company or you have one that does. I think that the marketplace and companies will say, if you don't want your name or your number in a directory assistance, you don't have to opt-in for it. And it doesn't have to just be one way or the other. And I think that clearly in the competitive marketplace, the companies-at least I have faith in the companies acting that way.

So therefore, my general philosophy is before we move forward as a government with new laws and legislation, my preference is to allow consumers to use this vibrantly competitive market to pick features and services that they want. I'm hesitant to support additional regulations, however well-intended, which effectively makes the choices for the consumers.

Again, I do want to thank our witnesses for being with us today. In the event we move to the witnesses after Senator Boxer's statements and Senator Wyden, are you going to want an opening statement?

SEN. RON WYDEN (D-OR): I'd like to -- (inaudible.)

SEN. ALLEN: All right. I know, but are you going to want to make a statement as well? All right, after statements from senators who are here, in the event that Senator Specter doesn't come in, I'll just go like this. That will be the signal you all can move forward so we can hear from you all as well. So with that, with the concurrence of Senator Wyden, we'd now like to hear from Senator Boxer, one of the sponsors of this legislation.

SEN. BARBARA BOXER (D-CA): Thank you so much, Senator Allen. And I've asked unanimous consent that my full statement be submitted for the record.

SEN. ALLEN: So ordered.

SEN. BOXER: And what I want to do is say the theory of waiting until there's problems is certainly legitimate, Mr. Chairman. But I can tell you right now, chaos will reign when our constituents start getting calls on their cell phones which they consider, in many ways, an adjunct to their land phone, which they consider, in many cases, a phone they carry for urgent business. If you want to wait until chaos breaks loose in your state, that's your right. But Senator Specter and I have teamed up in a bipartisan way to say common sense dictates that we ought to move forward in a fair way.

Now there's a big difference between your landed phone, your grounded phone and your wireless phone. In this, senators, when our constituents get a call, an unwanted phone on their cell phone, guess who pays for it. Our constituents. This is a total outrage and if we start seeing our names published in directories where anyone can call us in the middle of a work day, can start bothering our children, many of whom have these phones that they're told to only use in an emergency, I'll tell you that's, in my opinion, the wrong side of the issue to be on.

Now I know these companies well. I've got a lot of them in my state. I love them and I'm a good customer of theirs. But all the promises to the contrary that we won't sell your name and we won't do this and that and the other, we already know what goes on in the business world. It's the bottom line. Our names represent a lot of dollar signs. And all that is well and good, if I decide to opt-in. And that's what we're saying. If we want to have our name in a directory, whether it's a private directory so that when someone calls 411, they get my number, fine. Or a published directory, if I want to be in that, fine. And the wireless companies will be very good at persuading people, I think, that it's to their advantage to have their phone listed. And that's good. That's their job.

But I believe I'm here for a reason and that is to protect our people. And I would like to ask unanimous consent that a letter from the AARP endorsing the Specter-Boxer legislation be placed in the record at this time.

SEN. ALLEN: So ordered.

SEN. BOXER: And also Consumers Union support of our bill that comes from testimony that was given on September-actually it was today's testimony. But they can't be here, is that it?

MR. : (Inaudible.)

SEN. BOXER: So we ask that that be placed in the record.

SEN. ALLEN: So ordered.


SEN. ALLEN: Thank you, Senator Boxer.

Now we'd like to hear from Senator Wyden.


SEN. ALLEN: Thank you, Mr. Strigl, for your testimony. I'm sure there will be questions of you.

Senator Ensign, did you want to make an opening statement?


SEN. ALLEN: Thank you, Senator Ensign.

Senator Brownback did not want to make an opening statement. So we thank you.

SEN. SAM BROWNBACK (R-KS): If I could --

SEN. ALLEN: Go ahead, Senator Brownback.

SEN. BROWNBACK: Not make my opening statement but make it for the record.

SEN. ALLEN: So ordered.

SEN. BROWNBACK: And thank you for holding this hearing. I think it's a great hearing to be held and I hope we can really look at this issue in some real depth. I've got an opening statement that outlines that position because I think it's going to be a key one to wrestle with. Thank you.

SEN. ALLEN: Thank you, Senator Brownback.

Ms. Pierz, thank you and all the other witnesses for your forbearance. If you would please proceed.


SEN. ALLEN: Thank you, Ms. Pierz. I'm sure there will be more questions for you as well. Thank you for your testimony.

We'd now like to hear from Mr. Cox.


SEN. ALLEN: Thank you, Mr. Cox.

We'd now like to hear from Congressman Largent.

MR. STEVE LARGENT: Thank you, Mr. Chairman. Do I need to ask for unanimous consent that my entire statement be submitted for the record?

SEN. ALLEN: So ordered.


SEN. ALLEN: Thank you. Thank you, Mr. Largent. On behalf of Senator Wyden and myself and Senator Ensign and all of the senators here, we agree with you clearly on the Internet tax moratorium measure. Thanks for that nice little plug. Ron will get the House to pass that.

Now, we'd like to hear from you, Mr. Rotenberg.


SEN. ALLEN: Thank you. I want to thank all our witnesses for your testimony. Now we'll be posing some questions and have a discussion with you so we can best understand it from the very perspectives we've heard here. And this is a very good and balanced, diverse panel.

Mr. Strigl, you said, in so far as Verizon is concerned, you think a directory is a terrible idea. You want to have nothing to do with it for a variety of reasons. But would you then support Congress passing a law prohibiting a directory from even being put into place?

MR. STRIGL: Mr. Chairman, I don't think that a law is required.

SEN. ALLEN: Do you then not support this measure which does not ban a directory as such?

MR. STRIGL: Look, if I was --

SEN. ALLEN: As far as this proposal?

MR. STRIGL: If this is what Congress would like to do, I would say those who support the directory in our industry have it coming to them. I want to be very clear. This is not a project that we should move ahead with as an industry. There are other ways of doing this.

SEN. ALLEN: But do you think the government ought to stop the privacy --

MR. STRIGL: I am not for more regulation. Never have been. This is an extremely competitive business but I do think that this is a project that should not proceed. I think that privacy is extremely important. It's a matter of principle with us.

SEN. ALLEN: Let me say this. I agree in the significant aspect of this compared to even all the aggravations we get with pop-ups and all the rest on the Internet. The thing on cell phones, if you get a call, an unwanted call-and you get plenty of unwanted calls and I'm talking about true pestering calls-you are having to pay for it, unlike a landline or the Internet, which is a waste of time and effort but you're not getting billed for it as such.

Now, Mr. Largent stated in his testimony the policy of those in the wireless industry and not all want to do it. It may be good marketing for Verizon. But he stated, quote, "It will be opt-in only and participating carriers indicate that those participating, that there will be no charge for opting out. There will be no published directory, no Internet access to the numbers nor will there be any third party sale of numbers." Now, in so far as the panelists, does anybody disagree with that policy?

I understand, Mr. Strigl, you think it's a terrible idea. But do any of you all, in the event there is a directory, disagree with those principles?

MR. ROTENBERG: Key question, Mr. Chairman, I think, is what will be the consequence if those principles are violated? I mean, as I said in my statement, I think it's a good set of principles.

But if, in fact, one of the participants decides, and perhaps have a good business reason for doing so, to change, what will the consequence be?

MS. PIERZ: Mr. Chairman, I'd like to provide a comment also. I do like the principles that have been put in place as the CTIA plan. But I do think that we can do a little bit better and specifically, when we looked at the idea of knowing who's calling you because consumers said they were worried about getting calls from people they didn't want to talk to and not having the number divulged so that there's actually a gatekeeper in place. If I call directory assistance the first time and get your cell phone number, I've always got it and it's very easy for me to, as you said, pester you with calls.

But if each time you're calling directory assistance, it's forwarded and the person knows who's calling and can accept the call or not, you actually create a much more valuable service for consumers. But that's a very hard thing. No one carrier can put that in place without some sort of baseline that asks everyone in the industry to meet that standard. And then companies can build more advanced and protective services on top of that base. But it provides a common base across all fixed lines and wireless carriers to protect consumers' actual phone numbers so that it's not divulged and to let them know who's calling.

SEN. ALLEN: When you have a situation where-and no one disagrees with this -- 93 percent of all Americans live in markets that have at least four if not more. 93 percent. We don't have that. Obviously, you can get cable or satellite but there's not two cable. Even for broadband, at this point, you either get a cable modem. Those of us who would like to see DSL available more, maybe broadband over power lines, satellite, all the rest, Wi-Fi and so forth but the point is, watching the cell phone business with so many different companies offering it, people are going to switch. They're going to lose market share. You got to keep those customers for over a year to have-maybe even more for some of the inducements to get them as a customer.

Mr. Largent, let me finish with you then. What are the industry incentives to protect the privacy that is aligned with the interests of a particular consumer or customer? How does that affect your own economic interests from your perspective of those who want to get involved in this or may want to have their number listed in the directory?

MR. LARGENT: Well, Mr. Chairman, I'm glad that you ask that question because that's exactly what I want to talk about. And that is that the wireless carriers-my friend on the far left over here talked about, you know, what happens if they go a different direction after they've said they are not going to list your number or whatever. The fact is that the boilerplate contracts that we've all signed when we signed up for sale or service include in that language that says in signing and giving us your consent to sign this contract, we can put your name in a directory assistance. And they sign the contract. That's kind of been the boilerplate type of language that's been in sale or contracts for a long time, language which, by the way, all the carriers have said they're going back to their current customers and asking them, Do you want your number listed so they can either opt-in or opt-out. By the way, there's no charge to opt-in and there's also no charge to opt-out unlike the landline.

But my point is that carriers have had permission, contractual permission to list numbers for a long time and they've never done it because they have respected our customers' privacy rights. Now, when we want to do it, we're saying we're going to develop a 411 service that asks them, you know, do you want to play or not. And the real key question in this debate really is about what some people have sort of said offhandedly is this is about privacy. The question that I think the Senate needs to ask in considering this legislation is how is a customer's privacy potentially violated here?

And I think you've brought the guy to answer that question right here on my right and it is Pat Cox, who is the third party that has been chosen to protect that data that would be submitted by the participating carriers. How is a customer who either opts in or opts out-how is their privacy, their personal information going to be threatened as a result of this 411 service? And the answer that we believe we've gotten from Pat Cox and Qsent is that it's not at all. It's not threatened at all.

If you opt-in, you're saying I want my information published or available. And if you opt-out, you're saying you can't contact me and that wall will not be breached. So the bottom line and the answer to your question is that it goes to what Senator Boxer said, you know, we know business, we know what it's about. It's about the bottom line. If carriers start offending customers by violating their privacy rights, guess what? They get to vote with their feet and they get to move to a nonparticipating carrier and they lose market share. And then they start hearing from their shareholders and those people that make those decision are gone. And that's the way the market should work.

SEN. ALLEN: Thank you, thank you, Mr. Largent.

Senator Boxer.


SEN. ALLEN: Senator, I do believe he was talking about directionally on the panel.

MR. LARGENT: It was a totally tongue-in-cheek comment. But I apologize. I didn't mean to offend anybody.


SEN. ALLEN: Thank you, Senator Box

SEN. ALLEN: Thank you, Senator Boxer.

Senator Specter, we went forward with the panel here and we are in the midst of questioning. I would ask the colleagues who are in line, can we hear from Senator Specter? You may get dragged in to the questioning as well.

SEN. WYDEN: I'm next in line, I think. But I'll be happy to let Senator Specter go before me.

SEN. ALLEN: Well, I thank my colleagues who have been here through the whole hearing. And, Senator Specter, if you'd like to testify from that good seat, that's normally my seat on this committee. And so, we'll hear from you and then continue with the questions. And I thank Senator Smith and Ensign and Senator Wyden for their forbearance.


SEN. ALLEN: Thank you, Senator Specter. I know you're one of the MVPs in the Senate and having to be in different places. And we thank you and Senator Boxer certainly carried your message. You would have enjoyed listening to the testimony here which I think actually addresses many of your concerns from even those who are talking about a directory, that no one who wishes not to have their number in any sort of directory actually do have the option of doing so. And there's others, such as Verizon, who just think the whole idea is awful and don't want to have to do it at all.

At any rate, let us proceed now --

SEN. SPECTER: Mr. Chairman, I'd just like my prepared testimony introduced as part of the record.

SEN. ALLEN: So ordered. Make sure we get that. And I know you probably-if you want to stay, you may. In the event that you are being summoned somewhere else, we understand.

SEN. SPECTER: Mr. Chairman, it is not really understood widely how many places we have to be at the same time and as we speak, Appropriations is marking up billions of dollars and I'd like to go participate. Thank you.

SEN. ALLEN: And I hope you look kindly on us for our forbearance as you make those decisions on the Appropriations Committee.


SEN. WYDEN: Mr. Chairman, I just wanted to say there was a special reason why I wanted the Senator from Pennsylvania to go before me and that he's so helpful on that bill so many other things.

SEN. BOXER: Arlen, thank you so much for coming.

SEN. ALLEN: All right, all right. That's enough. Enough. All right. The committee will be back in order. No more of this groveling before Senator Specter.

(Laughter.) All right, Senator Wyden, any questions you may have.


SEN. ALLEN: Thank you, Senator Wyden. I'm going to have to leave. I want to thank the panelists. The committee will continue the hearing. The hearing will continue. I'm going to pass the gavel on to Senator Smith, who's next in line anyway.
Thank you all.

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