BILL ANALYSIS 1
1
SENATE ENERGY, UTILITIES AND COMMUNICATIONS COMMITTEE
DEBRA BOWEN, CHAIRWOMAN
AB 1733 - Reyes Hearing Date:
June 22, 2004 A
As Amended: June 15, 2004 Non-FISCAL
B
1
7
3
3
DESCRIPTION
Current law permits traditional landline phone companies to make
residential and business customer phone numbers available
through both a printed directory and "411" telephone directory
assistance.
Current law , through a rate-setting process at the California
Public Utilities Commission (CPUC), permits traditional landline
phone companies to remove customer phone numbers from public
directories, if a customer asks, and to charge a monthly fee to
each customer who chooses to have an unlisted number.
Current law doesn't restrict wireless telephone companies from
including customer wireless phone numbers in a public directory.
Current law specifically prohibits unsolicited telemarketing
calls to cell phone numbers using automatic telephone dialing
systems or prerecorded voice messages but does not prohibit
telemarketing to cell phones using live operators.
Current law prohibits sending unsolicited advertisements as text
messages to cell phones and pagers.
Current law allows people to place both landline and cell phone
numbers on a National "Do Not Call" Registry and requires
telemarketers to avoid calling any phone numbers on the
registry.
This bill requires wireless telephone companies to obtain
express written opt-in consent from customers before selling
lists of customer numbers or publishing wireless phone numbers
in a directory.
This bill requires the consent to be on a separate document in
at least 10-point type, and that it be signed and dated by the
subscriber.
This bill requires wireless telephone companies that bill
customers for receiving unsolicited telemarketing calls or text
messages to disclose on the consent form that by consenting to
have a published number, the subscriber may receive and may be
billed for receiving unsolicited calls or text messages.
BACKGROUND
The Cellular Telecommunications and Internet Association (CTIA)
is putting together a national directory of cell phone numbers
that could be available by the end of this year. The directory
is expected to include about 75% of the nation's 163 million
cell phone numbers. (Verizon Wireless has said it won't list
any of its 39 million customers in the directory.) Some experts
estimate the directory could generate $3 billion in directory
assistance fees and additional minutes sold for wireless
companies.
Many wireless telephone companies have been anticipating the
creation of such a directory for some time and have been
including in their standard contracts a specific clause that
gives them permission to publish numbers. For example,
T-Mobile's contract reads: "Unless you make other arrangements
with us and pay any required fee, we may list your name,
address, and number in a public directory."
Until recently, when people switched wireless phone companies,
their wireless phone numbers changed as well, so marketers were
reluctant to invest much energy in compiling databases of
wireless phone numbers. That changed last year when the Federal
Communications Commission (FCC) established rules on number
portability and for the first time allowed people to keep their
wireless phone numbers when they switched service providers.
The wireless telephone industry believes there's a need for a
cell phone directory because more and more people - about 8
million so far, according to the CTIA - are canceling their
traditional landline phone service and using only wireless
phones. Privacy advocates fear the new directory will cause a
wave of telemarketing and text message spam to cell phones, and
that aside from the nuisance, people will end up paying for
sales pitches to their wireless phone. Wireless phone users
currently pay for all incoming calls and text messages, either
on a per minute basis or by purchasing a "bucket" of minutes at
a fixed rate.
Telemarketing Laws . In 1991, Congress enacted the Telephone
Consumer Protection Act (TCPA), which specifically prohibits
using automatic dialers or pre-recorded messages to make
telemarketing calls to cellular telephones. Since the vast
majority of telemarketers use autodialing machines, the
restriction effectively bans telemarketing to cell phones.
However, neither state nor federal law places an outright ban on
telemarketing to cell phones, which means live sales calls made
to cell phones without the help of auto dialers are legal.
In 2003, the FCC revised its rules implementing the TCPA and
established, in coordination with the Federal Trade Commission
(FTC), a National "Do Not Call" Registry and gave people the
right to place home and wireless phone numbers on the directory.
Telemarketers (with the exception of charities and political
organizations) must search the directory every three months and
avoid calling any numbers on the registry.
While the TCPA restrictions on telemarketing to cell phones,
combined with California's ban on unsolicited text messages to
cell phones [AB 1769 (Leslie), Chapter 699, Statutes of 2002],
will certainly work to limit unwanted phone calls and messages
once the cell phone directory is published, this bill seeks to
give people further control over their privacy by giving them
the right to keep their wireless phone numbers out of the
directory in the first place.
Related Federal Legislation . H.R. 3558 (Pitts), called the
Wireless 411 Privacy Act, was introduced in November 2003 and
requires wireless telephone companies to obtain opt-in consent
from each current customer prior to publishing that customer's
number in a public directory. For new customers who sign up for
service after the bill goes into effect, the bill allows consent
to be contained within the standard cell phone contract but
requires companies to provide a separate notice to customers -
once at the time the person signs up for service and annually
thereafter - informing people of their right not to be listed in
any public directory. The bill requires companies to make it
convenient for customers to opt-out of the directory and
prohibits charging a fee to customers who choose to have an
unlisted number. Congress is also considering two other similar
bills: S.1963 (Specter) and S.1973 (DeWine).
COMMENTS
1.Can California Do This? While federal law generally preempts
states from regulating wireless telephone companies with
regard to rates and "entry into market" issues, it permits
states to pass laws with regard to the "terms and conditions"
of wireless phone service. For example, the CPUC recently
adopted the Telecommunications Consumer Bill of Rights, which
among other things requires wireless telephone companies to
give customers the right to cancel their contracts within 30
days if they're dissatisfied with the service.
2.Contract Abrogation. This bill would in effect undo
provisions contained in the standard customer agreements used
by several wireless carriers, including T-Mobile and AT&T
Wireless, which specifically permit wireless phone companies
to list customer names, addresses and cell phone numbers in a
public directory and to charge a fee to people who choose to
have their numbers unlisted.
While the wireless phone industry has stated companies
participating in the directory will get separate express
written consent from customers before publishing the
directory, they certainly aren't required to do so. If
companies don't obtain a new consent from their customers and
instead rely on the consent form in the original contract,
does this bill effectively abrogate those existing contracts
by precluding those companies from putting those numbers into
a public directory? Or is it permissible to change the law
to, as this bill proposes, impose restrictions how information
gathered by the companies can be used in the future,
regardless of the fact that consent was given when the person
signed the original, underlying contract?
In Homebuilding & Loan Assoc. v. Blaisdell (1934), the U.S.
Supreme Court upheld a state statute putting a moratorium on
foreclosures of real property under certain conditions. The
Court noted:
"The question is not whether the legislative action
affects contracts incidentally, or directly or
indirectly, but whether the legislation is addressed
to a legitimate end and the measure taken are
reasonable and appropriate to that end."
In Exxon Corp. v. Eagerton (1983), the U.S. Supreme Court
upheld a state statute imposing a tax on oil and gas producers
and prohibiting them from passing the cost on to customers
even though the producers' contracts had allowed them to pass
through their costs, including taxes. The Court explained:
"This Court has long recognized that a statute does
not violate the Contract Clause simply because it has
the effect of restricting, or even barring altogether,
the performance of duties created by contracts entered
into prior to its enactment. If the law were
otherwise, 'one would be able to obtain immunity from
state regulation by making private contractual
arrangements."
3.411 Only? According to the Cellular Telecommunications &
Internet Association the directory will be used only for
telephone directory assistance and will not be published as a
phone book, posted on the Internet, or sold to marketers.
However, the author and committee may wish to consider whether
this bill should specifically prohibit wireless phone
directory information from being published or sold.
4.Unlisted Numbers. Traditional landline phone companies SBC
and Verizon publish directories containing the names,
addresses, and home phone numbers of their customers. Both
companies give customers the option of having an unlisted
number, but at a price. SBC currently charges $0.28 per month
for an unlisted number, while Verizon charges customers $1.50
per month, and nearly half of Californians have unlisted home
phone numbers.
The wireless telephone industry has stated it won't charge a
fee to people who ask to have an unlisted cell phone number.
However, the author and the committee may wish to consider :
a) Whether this bill should specifically require wireless
phone companies to provide customers - once they've consented
to have their wireless phone number published in the directory
under this bill - the ability to opt-out of the directory at
any time; and b) Whether wireless phone companies should be
prohibited from charging a fee to customers for the service of
keeping a cell phone number unlisted.
5.Related Legislation . SB 199 (Murray) was amended on June 10
to require wireless telephone companies to obtain express
prior consent before disclosing a customer's wireless phone
number. The bill allows the Attorney General and district
attorneys to seek civil penalties of $500 for the first
violation and $1,000 for subsequent violations and gives
wireless phone customers the right to sue their cell phone
company in civil court for $1,000 per violation. That bill is
scheduled to be heard in the Assembly Judiciary Committee on
June 22, 2004.
PRIOR VOTES
Assembly Floor (76-0)*
Assembly Utilities and Commerce Committee
(13-0)*
* Vote was on a previous, unrelated version of the bill.
POSITIONS
Sponsor:
Author
Support:
Consumer Action
Consumers Union
Office of Ratepayer Advocates, California Public Utilities
Commission
Privacy Rights Clearinghouse
Utility Consumers' Action Network
World Privacy Forum
Oppose:
None on file
Jennie Bretschneider
AB 1733 Analysis
Hearing Date: June 22, 2004