Perspective: Legalized extortion by any other name

Members of the U.S. Senate heroically leapt into action last week by preventing cell phone companies from adding your mobile number to directory assistance without your permission.

Right?

In reality, the Senate Committee on Commerce, Science & Transportation's approval of the Wireless 411 Privacy Act bill was an exercise in frivolity and futility. All six of the cellular providers that are creating the 411 directory repeatedly have pledged to abide by a strict "opt in" standard for the service, which could launch in 2005.

Steve Largent, a former congressman who's now head of the Cellular Telecommunications & Internet Association, attempted to pacify the feckless committee members a day before the vote, stressing that "the only way a number will be listed is if the customer specifically asks that it be made available."

Largent's plea didn't work. The committee's Democratic members, joined by two Republicans, decided that the feds needed to force the cellular industry to do, well, precisely what the cellular industry was already doing.

By approving the bill, the committee members reversed what should be a legislature's normal procedure: to wait until there's a problem before rushing to regulate. That reversal would be bad enough by itself, but some senators chose to engage in some unfortunate scaremongering in the process.

Take Sen. Chuck Schumer, D-N.Y., who solemnly predicted that Americans' cell phone bills will "skyrocket because telemarketers will now easily be able to solicit them on the go." Wyoming Republican Mike Enzi warned that "the wireless industry is on the verge of introducing a telephone directory with phone numbers for every person who subscribes to a mobile phone service."

Well, no. Again, only people who opt in and voluntarily choose to have their numbers listed will be included in the 411 directory. Both senators should have known better.

So why did the Senate Commerce Committee approve an unnecessary bill? "I guess you'd have to ask the 12 senators who voted for the proposals," says John Walls, who works for Largent as CTIA's vice president for public affairs. "We tend to agree with the 10 who did not, thinking that it was unnecessary and that consumers are the ultimate regulators and should be given the opportunity to make their minds up for themselves." (Verizon Wireless, for instance, has promised that none of its subscribers will be added to the directory assistance database.)

Two explanations
A simple explanation for the vote is that the senators like excuses to grandstand in front of the television cameras and jawbone about protecting consumers. Another explanation is more disturbing: that our elected representatives are engaging in what amounts to legalized extortion.

Perhaps there was a legitimate reason to approve the Wireless 411 Privacy Act. But so far nobody's suggested one.

"Politicians will enact legislation or press for regulation that they suspect will cause problems," says Don Boudreaux, chairman of the economics department at George Mason University. "They know that the people who are affected by the problems will come to them, begging that the problem be solved and contributing to their re-election efforts. Economists have a term for it: rent extraction...It's particularly likely when the issue is one that can be portrayed in sound bites and very quick headlines as something good. 'I voted to require opt-in'--that sounds good. It doesn't sound suspicious on its face."

Boudreaux and other scholars, including Northwestern University's Fred McChesney, have documented how politicians have painstakingly made some areas of the law--like the tax code--especially convoluted and then have proceeded to rewrite portions every year or two. The repeated tinkering and high stakes, the argument goes, guarantee a constant flow of political tribute.

It's surely no accident that Fritz Hollings, the top Democrat on the Commerce Committee and backer of the 411 bill, receives two-thirds of his campaign contributions from outside his home state of South Carolina. The two biggest contributors have been communications firms and lobbyists--precisely the areas of the law that Hollings can affect through his committee job.

Perhaps there was a legitimate reason to approve the Wireless 411 Privacy Act. But so far, nobody's suggested one, which leaves us with the alternative explanation--and the unflattering picture it paints of today's political process.

Biography
Declan McCullagh is CNET News.com's chief political correspondent. He spent more than a decade in Washington, D.C., chronicling the busy intersection between technology and politics. Previously, he was the Washington bureau chief for Wired News, and a reporter for Time.com, Time magazine and HotWired. McCullagh has taught journalism at American University and been an adjunct professor at Case Western University.

More Perspectives

[davearonson]

Wait until there's a problem?

Or even a reasonable likelihood? Yeah, right, don't we wish. If that were "normal procedure", we'd have a fraction of the number of laws, and I'd be a lot less reminded of Tacitus.

[Royce]

Could It Also Be That the Teles Are Not Trustworthy

I really don't disagree with most of what you say in the article, but it is also possible that, based on experience with corporate entitities, that some Members of Congress don't trust what the companies say they will voluntarily do. The fact that Verizon says its policy today is opt-in does not mean that tomorrow, it will not be something else. Personally, and based on experience, if Verizon believes that it will make more money having all of its subscribers on a 411 than it will lose by losing subscribers, it and all of the other companies will do it.

Also, Hollings is not a good example right not as he is retiring so really has little clout now vis-a-vis your main hypothesis. Although in the past, you betcha!

don't rely on Verizon, honey

The irony in this story is that Verizon has been the most aggressive of the Baby Bells in using and releasing customer information from its landline telephone customers! Verizon has challenged the privacy rules of state commissions on the grounds that it, Verizon, owns that information and the customer has no right to privacy (other than what they have paid for.)

You see, Schumer actually knows this, so his willingness to trust Verizon is not very strong.

[declan00]

Another way to look at it

I'm not arguing that large telcos are particularly trustworthy (though I'd be happy to stack up their record against the average presidential candidate).

All I'm saying is, as I wrote in the column, "wait until there's a problem before rushing to regulate." If the cell phone companies turn out to be lying rat-bastards, then fine 'em or revoke their licenses. But there's no need to do anything on the topic now except issue a stiff warning.

[hardedge]

Give 'em hell, Harry..., er, Royce!

The job of Congress is to make laws. Notice the lack of specificity: not good laws, important laws, necessary laws, non-redundant laws, etc.. The alternative is to have these guys sitting around on their hands all day while collecting an obscene salary. Admittedly, the parade of posturing peacocks in front of the CSPAN cameras may not be much better but at least we're getting a show for our money.

Sorry... Too old to be anything by sarcastic about the governemnt.

Ignorance is bliss

If ignorance is bliss, Declan must have been smoking a fattie this weekend when he penned his ridculous fantasy about how laws are made. And no, quoting two professors who make their money writing screeds for conservatives doesn't make the ideas more believeable; it just indicates that academicians can be ******, too. (And thank you for outing them, Declan)

"Perhaps there was a legitimate reason to approve the Wireless 411 Privacy Act. But so far, nobody's suggested one, which leaves us with the alternative explanation--and the unflattering picture it paints of today's political process."

Well, Declan, actually nearly everyone who owns a mobile phone has suggested one: they don't want their number listed (or ex directory) and they don't want to have to try and get it unlisted after there is a problem. Under the proposal by some carriers, there would be no rules, and you would 'trust them' to keep your number (and other personal information, like calling partners, friend's numbers, your income, your location, your phone type, etc.) private. Declan would have the customers be the 'ultimate regulators', requiring them to haul themselve en mass into court or Congress to lobby for corrective legislation only if and when there is a 'problem.' By then, of course, it will be too late and the cows will be out of the proverbial barn. (Good proverb, BTW!)

Fact is, at that point the damage will be done, there will be a huge corporate interest in protecting the status quo, and the 'problem' will have to be 'fixed', instead of the being avoided in the first place. Once everyone's number is listed and their personal information furnished to telemarketers and scammers, how do you 'unlist' it?

There IS a reason to pass consumer protection before there is a problem, because these are public services, consumers are too many and too diffuse to effectively approach Congress, and why should we waste millions of dollars of the public's time and money to correct a problem, when we can avoid the entire problem (and attendent costs which drag down the economy) in the first place?

[TheMidnightCoder]

I'm glad they did because the industry changes its mind.

If they had not made this law, how long would the industry hold its promise? I'm sure they would change their minds at the drop of a hat (or nickel).

[alskiontheweb]

Since when...

...do I trust any telecommunications company to do the right thing with regards to privacy? How much do they make a year not publishing peoples numbers (a ransom let say)? That's a rather unethical fee if you were to ask me. The way I see these clowns is that any opportunity to make money via ransom, they would do. I am glad to see that they will be made to do the right thing from the get go rather than trying to reverse a mistake. The whole regulatory process is broken anyway, it's all a giant mess where the big guys wage their wars by buying the lobby. It's a joke...

Declan and CNET, wake up and smell the coffee

I seriously question, at best, the intelligence, and at worst, the
integrity, of this author. It reads more like an op-ed piece
penned by Steve Largent and the telecommunications lobby than
the "consumer beware" article it purports itself to be.

The telecoms can "pledge to abide" by whatever standards they
want to... I, as a customer, want a requiring specific action on
their part.

The notion forwarded by the author is nothing more than having
the wolves guarding the hen-house. Other respondents here
have written much the same thing... that the telecoms are
completely untrustworthy, arrogant, and generally stupid
lumbering beasts except when it comes to overcharging us (the
public) and "extorting" every cent out of the public they possibly
can (including the ridiculous fees to NOT list our numbers as
only one example of this). If you don't believe me/us, just try
calling up your friendly telecommunications company and
contesting any item on your bill (the more obviously erroneous,
frivolous and fraudulent the better) and see how many layers of
nonsense (and hours of your time) you spend attempting to get
it resolved ... only to find out a month later that they never
resolved anything (even though they told you so). This will cure
anyone of the sort of mindless naivetee that the author of this
article displays. Folks -- these companies are our enemies
EXCEPT when they are not... not the other way around. These are
some of the most disorganized (in many cases VERY consciously
disorganized) and self-aggrandizing companies (and I mean to
condemn the whole industry here as I've never found an
exception) I have ever dealth with.

The necessity of this law is self-evident.... kudos to our duly
elected representatives for, at least in this case, safeguarding
our interests. Now, back to my original point.

Who is this Declan McCullagh... so called "Chief political
correspondent, CNET News.com"? Is he really so completely
insulated from the reality of business today? If so, how? From
the by-line, he is apparently CNET's authority on politics and
technology. How can one be promoted as such an authority and
yet demonstrate a nearly complete ignorance of reality? And why
does he feel that he can feed this slop to us (the public) by
pandering to the generally held (and unfortunately often
accurate) sense that our legislators are wasting our time and
money? Our elected officials our OUR elected officials and, no
matter how derailed or misguided they get, they are ultimately
accountable to us (the public). It's this kind of dis-informative
non-reporting that is eroding our (the public's) last bit of
respect for the MEDIA. Wake up, CNET, your being poorly
represented here and you are doing a horrendous disservice to
your readers.

agree with Eric Morrison and Mike Weisman

Having been held hostage by telemarketers on my land line, I do not trust the same parent companies to respect my privacy on my cell lines.
Even though I am on the national as well as state no call list, I still get a few sneak through telemarketers (all speaking spanish) apparently my surname makes them think I don't know my rights.
I most certainly don't want this invasion on my cell.
Eric and Mike said it all well.

[declan00]

Schumer was wrong, or lying

You give too much credit to Schumer. His prediction was flatly wrong (didn't even mention Verizon). First, a 1991 law already restricts telemarketing calls to cell phones. Second, the Do Not Call list also applies. Third, even if Congress had done nothing, the industry had already reached the "opt-in" conclusion. So Schumer is wrong, or lying, or both.

You have an axe to grind

What is your agenda, Mr. McCullagh? This is the contextual
premise of your article as I read it "politicians are liars and not to
be trusted" yet you jump to the defense of the telecom industry
(despite your protestations otherwise) like they are
innocent, loving children who are only out for our best interests.

Your premise reads to me to fit with the larger media bias these
days that I would characterize as... "you know, all politicians are
liars, so you shouldn't expect anything else... so they are all
equal". I reject this assertion and am insulted by your
assumption that we will all blindly agree to this nonsense.
Certainly there has been a tremendous movement to disinform
the public by our political leaders (as a disenfranchised
Republican, in my opinion lead by the Republican party with
their pandering to bias, fear and hate... with the Democratics
scrambling to counter, leading them down the slippery slope as
well). I reject that all politicians are liars and I reject any
acceptance of lying or deceit by our elected representatives. I'm
not so naive as to believe it doesn't exist, but our job as the
electorate is to unrelentingly challenge disinformation and
deception at every turn and force our politicians to deal with real
issues... not media fodder.

As a journalist what is your mission? Are you really trying to
educate, inform and engender action or are you simply
pandering to our lowest thoughts and biases. I really cannot
fathom your blind allegiance to an industry that is, historically,
demonstrably ignorant of consumer rights. The notion you
continue to promulgate that we should "wait until there is a
problem, passing this law was a complete waste of time" is
completely ludicrous.

Once again, kudos to the politicians on both sides of aisle who
came together and stood up for our rights and have done what
we elected them for in the first place. This is what your original
article should have been about. But then again, maybe that
wouldn't "sell".

[gidney2]

legalized extortion - nonsense

First Mccullagh says the legislation isn't needed since the phone
companies were about to do opt-in anyway. Then he says it's
legalized extortion -- essentially making them give money to
politicians to fix the problem.

If the legislation just requires what the phone companies were
going to be doing anyway, what exactly is their problem that
needs to be redressed?

Perhaps he should try harder next time to contact the '12
senators who voted for the proposals' and ask them why they
voted the way they did.