Imagine a company that charges consumers for the privilege of not participating in its business -- a venture that profits by revealing information about its customers. And whether they pay or not, it still makes money off them.
That's the heads-we-win, tails-you-lose game that large local phone companies in California play with directory listings. Customers who don't want to be included have to pay a fee -- not just once, but every month -- to have an unpublished number. Evidently it takes an ongoing effort to make sure these numbers don't magically reappear in the listings. Meanwhile, the companies generate revenue from the phone numbers of those who don't pay by publishing them in advertiser-supported phone books and selling the listings to other companies. They also can operate 411 services, collecting fees for looking up and disclosing numbers -- or, in the case of an unpublished number, for telling the caller that it can't be revealed.
State Sen. Sheila Kuehl (D-Santa Monica) wants to end the practice of charging for phone number privacy. Wireless companies don't publish mobile numbers, and small local phone services already are prohibited from charging for not listing their customers' digits. Kuehl's bill, SB 1423, would extend the prohibition to all providers of local phone service. A Senate committee unanimously approved the bill last month, but it has drawn stiff opposition from AT&T;, Verizon and cable operators, which have introduced their own local phone services.
The bill would wipe out about $70 million the big telcos collect annually in fees for unpublished numbers. That's well under 1% of the total local phone revenue in the state. Opponents of the bill say the fees help support "universal service," the policy of providing affordable local phone lines even in areas where costs are high, so companies would raise the price of other services to replace what Kuehl's bill would cost them. But that just raises the question: Why are consumers who want private numbers contributing more to the cause of universal service than those who don't?
In light of the emerging competition among providers of local lines, the California Public Utilities Commission dropped its price controls in 2006 for many elements of phone service. The state's largest telcos have shown how weak that competition is, though, by jacking up rates on unpublished numbers and other popular options, such as call waiting and caller ID. AT&T;, which used to charge 28 cents a month for an unpublished number, now charges $1.25. The increase could prompt more people to drop their demands for private numbers, but that could benefit AT&T; too, by helping attract more customers for its highly profitable caller ID service.
Lawmakers should be leery of any proposal that would give the government power to set prices, as Kuehl's bill would do. But the state does have an important role to play in helping its residents guard their privacy. It's one thing for companies to offer customers an extra benefit in exchange for the use of their personal information. It's another to charge customers more to keep their personal information private. Kuehl's bill would make the big land-line telcos and cable operators take the same approach to user privacy as the mobile phone companies, and that's the right way to level this playing field.