Pacific Bell Bid to Rent Listings Is Put on Hold

Last month, Pacific Bell, one of the nation’s largest phone companies, began telling its 7.2-million residential customers that it will rent out its customer lists, just like mail-order specialist L. L. Bean, magazine publisher Time-Life, credit-card issuers, even hospitals--in short, almost everyone with a list to rent. The reason: “customer demand,” company spokesmen said.

Actually, the “customers” demanding these lists were all businesses--financial institutions, insurance companies, newspapers, vendors of various goods and services. Some residential subscribers, whose listings were about to be offered up for commercial use, were less enthusiastic. “I feel they shouldn’t. This isn’t a mail-order house but a public utility,” one Pasadena woman said. “Their service is something I have to have-- which sets them apart from other businesses.”

As people realized what was happening, protests to consumer groups, newspapers and the California Public Utilities Commission increased, and the PUC, which had accepted Pacific’s plan without challenge in February, issued an “investigation and suspension order” delaying the program’s start. “People can’t understand how utilities set rates,” says Sylvia Siegel, executive director of TURN (Toward Utility Rate Normalization), a San Francisco-based consumer group, “but they can understand this.”

Already in Directories

Pacific Bell doesn’t understand the flap. After all, the information offered is already in public telephone directories. Indeed, for years, big list marketers “have been taking our telephone books and putting them on computers,” says Jerry Abercrombie, Pacific’s director of information resource products, and neither the public nor the phone company (which holds a copyright) has been able to stop it.

What’s more, says Pacific, it’s just trying to diversify in a new competitive environment, to generate new revenues so it can hold down service rates. Nor is it the first: Illinois Bell (2.5 million residential customers) has been renting lists since last fall, Mountain Bell (5 million customers) since last August.

The good news to worried consumers is that such lists don’t include any unpublished names, addresses or numbers, and some companies including Pacific, specifically ask the consumer whether he wants his name rented. The bad news is that instead of asking for approval by a simple check-off on a bill stub, they use a “negative option” plan (a book club tradition) forcing the customer to mail in a card specifically requesting ex clusion. Small wonder Pacific expects only a 5% return.

The rentable information is generally limited to what’s in annual directories, but it’s certainly more up-to-date, and maybe even “segmented” according to prefix, area code, perhaps census tract. Information on a customer’s service, calls, or payment records is still considered confidential.

Repackaging Directory

“Basically, all we’re doing is repackaging the telephone directory into a medium suitable for direct mailers,” says Kathy Whalen, product director for Ameritech Services in Chicago, a subsidiary of Illinois Bell’s holding company. In the case of Illinois and Pacific Bell, that medium could be ready-for-use mailing labels; Mountain Bell’s, says spokesman Bob Meldrum in Denver, could be “actual on-line system capability, allowing businesses to gain access to our data bases.”

Mountain Bell rents to “collection agencies, direct mailers, whoever,” says Meldrum, and “whatever the customer wants to do with the information is up to them.” Pacific and Illinois Bell will screen applicants and their intended use of the lists, and will “seed” the lists with employee’s names so the company can check on that use. Abercrombie says Pacific will reject anything that’s “unacceptable, socially and morally repugnant--sexually explicit material, offers of the Hope Diamond for $9.99, rip-offs. We have a higher responsibility to our rate-payers because we’re a regulated utility.”

Many think the bigger question is whether regulated utilities should go into the “information” business at all. A telephone company is already in “the information distribution business,” says Mountain Bell’s Meldrum, and list rental is just an expansion. “Our goal,” he says, “is to provide maximum use of the local telephone network for the benefit of customers.”

Indeed, customer listings, like directory assistance, are considered “information products,” says Abercrombie, and the information therein “to some extent, an asset of Pacific Bell.” List rental is therefore a perfectly appropriate diversification, and one promising $2 million in revenue its first year, $7.5 million by the third.

To many consumers, this diversification seems less an added service than a substantial change in service, and one requiring public review. “They’re using their utility business to spin off other businesses,” says Siegel. “The utility rate-payers are their venture capitalists.” (To what extent, no one knows: phone companies consider the cost of these start-up enterprises confidential and proprietary information.

Invasion of Privacy

More important, says Siegel, this particular venture is “an egregious invasion of privacy” from a public utility, whose subscribers have no choice about subscribing. Moreover, says Siegel, “They’re not in the information business; they’re in the business of providing telephone service. This is just Step One. Step Two is getting into more confidential information from their computer files--on customer calling patterns, perhaps, or economic ability.”

Pacific Bell says not, although the company certainly “has the capacity to segment customers by a number of variables for its own internal use,” says Abercrombie. Furthermore, in its February filing to the PUC, Pacific reserved the right to use information other than White Pages’ names, addresses and/or telephone numbers “at the utility’s discretion,” even including “sources . . . designated as confidential or proprietary to the utility.”

Obviously, it’s that Step Two potential on the mind of citizens already aware that other public entities, such as motor vehicle departments and tax assessors, rent out their records, and without notice. “I guess the feeling is that once phone companies start dealing in ‘information,’ there’s no stopping it,” sighs a Pacific subscriber. “It’s like a gathering storm.”