High Court Rejects Curb on Phone Data Use

Turning aside a plea for enhanced privacy, the Supreme Court on Monday refused to limit how telephone companies use information gleaned from customers’ bills in trying to sell them additional services.

The justices, without comment, refused to reinstate Federal Communications Commission rules wiped out as violations of telephone companies’ free-speech rights.

The FCC rules, imposed under a 1996 telecommunications law, had required companies to get customers’ permission before using or sharing their records--calling patterns and other personal information--to market new services to them.

The commission concluded that such an “opt-in” approach would best ensure that customers knowingly waive, at least partly, the privacy of their phone records.

US West, a Baby Bell providing local phone service in 14 Western states, challenged the rules for restricting the way it shares customers’ personal information with its own divisions.

It said the FCC could safeguard customers’ privacy by allowing an “opt-out” approach--letting phone companies use customer records to target pitches for new services as long as they ask permission to do so and customers do not expressly object.

A three-judge panel of the U.S. 10th Circuit Court of Appeals ruled, by a 2-1 vote in August, that the federal rules went too far. “The FCC . . . insufficiently justified its choice to adopt an opt-in regime,” the appeals court panel said. That approach raised “serious constitutional questions,” it said.

The panel did not strike down the provisions of the telecommunications law the rules sought to implement, and did not bar the FCC from trying to impose new privacy-protecting rules.

The full 10th Circuit court voted 6-5 in November against reviewing the panel’s decision.

FCC Chairman Bill Kennard rigorously criticized the panel’s ruling, calling it “a sad day when the First Amendment rights of telephone companies to solicit business outweighs the rights of consumers to protect their privacy.”

But the commission decided not to mount a Supreme Court appeal. The appeal acted on Monday was filed by the Competition Policy Institute, a nonprofit organization that advocates greater competition in telecommunications and is funded primarily by companies seeking entry to the local telephone service market.

In a separate case Monday, the Supreme Court said it would hear a challenge by GTE Corp. involving federal rules and subsidies intended to keep basic telephone service affordable in rural and low-income areas.