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Witness Testimony
Mr. W. Lee Hammond
An Examination of Wireless Directory Assistance Policies and Programs
Chairman Barton and Members of the Committee: My name is W. Lee Hammond and I am a member of AARP's Board of Directors. On behalf of AARP and its 35 million members, thank you for inviting us here this morning to testify on H.R. 3558, the "Wireless 411 Privacy Act," introduced by Representatives Pitts and Markey. AARP supports this legislation because it will maintain consumer privacy by giving cell phone owners a choice as to whether their cell phone number is included in a wireless directory, and will protect consumer pocketbooks by shielding them against charges for keeping it private. The number of cellular or wireless telephone subscribers in the U.S. has grown substantially over the past decade, increasing from roughly 16 million in 1994 to 97 million in 2000, and to more than 160 million today. Many of these subscribers are older Americans. In fact, consumers age 50 to 64 are almost as likely as those age 18 to 49 to have cell phones. While consumers age 65 and older are somewhat less likely to have cell phones, cell phones are of growing importance to this age group as well. In fact, cell phone users age 65 and older are most likely to say that security in case of an emergency is the main reason they have a cell phone. In contrast, younger cell phone users are most likely to list convenience as the chief reason they have a cell phone. Privacy protection is a critical issue for cell phone users of all ages. While many subscribers to more traditional landline telephone service also want to keep their home numbers private, cell phone subscribers have additional incentives to do so. First, the privacy of wireless subscribers has always been safeguarded. Therefore, many cell phone users now expect to receive calls only from those individuals to whom they have personally given their number. Second, wireless service providers, unlike their landline counterparts, charge for incoming as well as outgoing calls. As a result, wireless users have to pay for any unwanted, incoming calls. A recent study by the AARP Public Policy Institute, which surveyed wireless telephone users age 18 and older, confirms that cell phone owners place a high value on the privacy of their cell phone numbers. As part of this survey, we asked cell phone subscribers whether they thought it was good or bad that there is currently no way for another individual to get their wireless phone number unless the respondent chooses to give it to them. Nine out of ten wireless phone owners of all ages said they thought this was a good thing. The consensus on this point is unequivocal. We asked cell phone owners whether they would want to have their wireless phone number included in a directory assistance database so that others could locate their number. Only one in ten wireless phone owners age 18-49 indicated that they would want to be included in such a database. Far fewer of those age 50-64 (six percent) indicated that they would want to be included in a wireless directory, and among those age 65 and older, just one in twenty (five percent) said that they would want to be included in a directory assistance database. The consensus on this point is also clear and unambiguous. Finally, we asked wireless phone owners to assume that a cell phone directory would in fact be compiled and then requested that they choose one of two options as the best method for creating a directory. Option #1 was to have the wireless providers add every cell phone number to their directory and then give cell phone owners the ability to have their number removed upon request. Option #2 was to add only those phone numbers of wireless users who give their permission to do so. Respondents of all age groups overwhelmingly indicated that a wireless directory should only include the cell phone numbers of those wireless users who elect to participate. In fact, only about 6 percent of all cell phone owners selected the opt-out method as described in option #1. On this point as well, the consensus is clear cut and unmistakable. This survey underscores the need for the bipartisan legislation - H.R. 3558/ S. 1963 -- introduced by Representatives Joseph Pitts (R-PA) and Edward Markey (D-MA) in the House and Senators Arlen Specter (R-PA) and Barbara Boxer (D-CA) in the U.S. Senate. AARP supports these bills and believes that consumers deserve the right to maintain the maximum amount of control over the disclosure of their wireless phone numbers. In this regard, we are not convinced that wireless directory assistance can be managed in a manner that effectively safeguards customer privacy unless Congress creates legally enforceable rights to ensure that this occurs. Some critics of H.R. 3558 and S. 1963 contend that these bills are unnecessary in a competitive wireless industry and make the point that most Americans live in a market served by three or more wireless providers. They argue that with competition in the marketplace, customers will simply take their business to a wireless provider who is willing to meet their needs. Nevertheless, the existence of numerous competitors in the wireless telephone market does not necessarily ensure that consumers can choose among these competitors or freely switch providers. In fact, among all wireless subscribers who responded to a 2003 AARP survey, just 33 percent have ever switched companies to get a cheaper rate. Even fewer older respondents report that they have changed their wireless service provider. The rate of consumer switching in the wireless industry contrasts dramatically with that of the long-distance telephone industry. According to another AARP survey released in 2000, 62 percent of consumers who made long-distance telephone calls said they had changed their long-distance company to get a cheaper rate. One explanation for the lack of customer turnover in the wireless industry is the fact that most wireless telephone companies require their customers to sign long-term contracts that include penalties of $175 or more for early termination. Some in the wireless industry contend that the low turnover or "churn" rates are the result of overall customer satisfaction. However, AARP research suggests that the more consumers use their cell phones, the less satisfied they are with their service. More specifically, the heaviest cell phone users, who are generally in the best position to assess the overall quality of their service, are less likely to report being very satisfied with their service. When these cell phone users were asked why they remain with their current provider despite a low level of satisfaction, the most often-cited reason was that they wanted to avoid paying an early termination fee. The development of a wireless directory without sensible and effective privacy safeguards is not a risk worth taking. The consensus on this point is unequivocal. Congressional action is necessary. In this regard, we appreciate the work of the sponsors of H.R. 3558 and this Subcommittee for their leadership in crafting legislation that ensures consumers have a choice as to whether their cell phone number is included in a wireless directory and protection against charges for keeping it private. We urge you to enact industry-wide privacy protections for cell phone subscribers now. The industry is poised to implement a wireless directory assistance service; Congressional action could not be timelier. |