VERIZON WIRELESS WON'T BUDGE ON NATIONWIDE 411 DIRECTORY

The U.S. Senate Commerce Committee voted 12 to 10 in favor of a proposed national 411 directory for wireless phone numbers last week, but even if it is passed by Congress, the directory's impact looks to be severely blunted. Verizon Wireless, the nation's largest mobile carrier, remains fiercely opposed to such an initiative, and even advocates agree the current proposal will not be effective without at least the full cooperation of each of the national operators.

“The industry is missing the boat when it comes to creating a wireless directory,” Verizon Wireless CEO Dennis Strigl told the committee before the vote. “We at Verizon Wireless think it is a terrible idea, and we will not publish our customers' cell phone numbers or otherwise participate in the plan you have heard about today.”

Strigl said he has received a number of supportive letters from subscribers since first outlining his opposition to the directory in June. “I have not received a single letter from any of our 40 million customers saying that they want their wireless number in a directory,” he added.

Verizon is the only one of the six national wireless carriers opposed to the directory, which has been in the planning stages since early 2002. Proponents — including the Cellular Telecommunications & Internet Association, AT&T Wireless, Cingular Wireless, Nextel Communications, Sprint, T-Mobile USA and Alltel — insist that listings will not be mandatory and that privacy checks and balances will be strictly maintained.

According to CTIA President and CEO Steve Largent, the approved plan is founded on four basic tenets: That inclusion in the directory be opt-in only; that there will be no fee to opt in or out; that directory data will be held exclusively by a secure third party (in this case, contact information service provider Qsent); and that the data cannot be sold or accessed by any other entity for any other purpose.

The Wireless 411 Privacy Act (S. 1963) passed last week was introduced by Sens. Arlen Specter (R-Penn.) and Barbara Boxer (D-Calif.) and will require by law that any existing cellular customer or new customer be allowed to keep their mobile number out of the directory at no charge.

Boxer and Specter softened the terms of their original bill in an attempt to find common ground with Sens. John McCain (R-Ariz.) and Ron Wyden (D-Ore.), who share the wireless industry's concerns about regulations. Given the amount of time necessary to rewrite the bill, Congress will likely delay a final decision until after the November election.

Witnesses before the committee were divided in their opinions on whether the amended bill's privacy protections should be voluntary or defined by legislation. “I don't think a law is required,” Strigl said. “But if this is what Congress would like to do, I would say those who support the directory in our industry have it coming to them.”

Largent argued that the government should not attempt to regulate the directory, which a recent Pierz Group report suggests could generate up to $2 billion in revenues by 2008.

“I have a burning question in my chest: Why does a competitive, vibrant industry have to come before Congress to ask permission to offer a new service to its own customers?” Largent said. “Is it a presumption in Washington that the government cares more about wireless customers than carriers do? I say no.”

There is growing demand from consumers for a wireless directory. Kathleen Pierz, managing partner of the Pierz Group, testified before the committee about the results of her firm's independent research survey of 1503 mobile subscribers, which found that with the right privacy safeguards in place, up to 62% of consumers would list their mobile number.

The most popular solution, from contact information services provider Wireless Directory Network, would allow consumers one of three choices: listed, not listed or listed for messages only, which would require prospective callers to pay a fee to leave a message with the party they wish to contact. Slightly fewer than 60% of respondents would list their numbers if callers were pre-announced, while more than 50% would opt in under the CTIA's proposal (see figure).

Among those consumers in favor, 76% said they supported the proposal in order to find people when necessary — or in an emergency. Among subscribers concerned about making their numbers available, 28% cited questions of overall privacy, while another 28% cited “calls from people I don't want to talk to.”

Following the hearing, Pierz told Telephony that despite the Senate committee's recommendation, the current proposal is doomed to failure without Verizon's cooperation. “It's just like number portability: No one carrier can say ‘I'm going to do number portability’ and make it work. It takes two to tango.”

According to Pierz's research, about 67% of all residential numbers are currently listed, and combined with business numbers, about 80% of all U.S. landline numbers are available through traditional directory assistance. Pierz speculated that for a wireless directory to succeed, roughly three-fifths of mobile subscribers would need to agree to opt in.

“This service will take time to build no matter what, but 60% is the critical-mass point in my mind,” Pierz said. “Sixty-seven percent of residential numbers are listed, so you need to get to 60% on wireless.”

But with Verizon's 40.4 million subscribers effectively off the table, about one-quarter of the estimated 168 million U.S. wireless subscribers must be eliminated from any realistic discussion. “[Verizon Wireless] positioned themselves as the consumer good guy,” Pierz said. “If this doesn't go well, they can say ‘See, we told you so.’ They're the 800-pound gorilla. Time will tell if this was a genius move.”

Ironically, Pierz's research indicated that one national carrier's subscribers showed a particularly strong interest in the 411 directory. “Verizon Wireless customers were slightly more willing to list their numbers under any privacy conditions,” Pierz said. “It was only three to four percentage points higher, but still…”

But Strigl's comments suggest he will not relinquish opposition soon. “We have other things to do,” he said. “Rather than build a wireless directory, I would prefer to spend our time and attention building a high-quality network. It's that simple.”