New Rules Limit Use Of Phone Data Consumers Must Give Ok Before Information Is Used

The government moved Thursday to protect the privacy of what many people assumed was already private: The people they call or page, when and how long they talk, and how much they spend for service.

The Federal Communications Commission agreed to require telecommunications companies to obtain permission - either written, oral or electronic - before they use customers’ records, calling patterns and other personal information to market new services to them.

The new rules take effect in about two months. They will apply to telephone, cellular and paging companies. Companies that break the rules can be fined.

When people make calls or pages, the companies providing them service end up with personal information including who, when and for how long they called. They can also tell how much their customers spent for service.

While the information serves as the basis for a customer’s bill, it also provides the companies with a marketer’s dream.

“Telephone companies know a lot about you personally,” but most customers don’t know that, said FCC Chairman Bill Kennard. The FCC’s new rules “empower consumers to protect the privacy of that information.”

A 1996 telecommunications law required telecommunications companies to get written approval from customers before releasing or selling their personal information to other companies.

It also required them to obtain permission to use the personal information before pitching the customers most of their own, unrelated services or products.

The list included anything the customers don’t currently buy, ranging from credit cards to other telecommunications services such as Internet access and cellular service.

But what wasn’t clear - at least to some telecommunications companies - was how they should go about obtaining such permission. They asked the FCC for clarification.

The nation’s largest long-distance carrier, AT&T, as well as other companies, wanted the FCC to let them use a “negative option approach.”

Under that approach, companies would assume they had permission to use customers’ personal information unless customers told them they did not. AT&T said that would be the most cost-effective way of obtaining approval.

But the FCC rejected the approach, because it would put the burden on customers to protect their privacy. Instead, the FCC’s approach puts the onus on telecommunications companies, commission officials said.

The new rules, however, won’t require companies to obtain permission to use customers’ personal information to sell them ancillary services such as Caller ID or an additional phone line, FCC officials said.

Companies had mixed reactions to the new rules.

BellSouth complained that they “mean more regulation, confusion and inconvenience for consumers.” Sprint was generally happy, saying it would help protect consumers. MCI wasn’t sure whether the rules would be good for customers and its business because it hadn’t read the order, which is not yet available.

AT&T said the rules create an unfair loophole. Local Bell telephone companies, once they secure customer approval to use personal information, would be permitted to share that information with their affiliated long-distance companies.

AT&T said this gives the Bells a big advantage because AT&T and other long-distance companies can’t share customer information with their local phone businesses.

Separately, the FCC also opened a review of ownership rules governing direct-broadcast satellite TV companies, such as DirecTV.

The commission is considering restricting cable TV companies from also owning so-called DBS providers. There are no limits now.