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Washington regulators adopt nation’s strongest telephone customer-privacy rules
 
Nov. 7, 2002

Washington regulators adopt nation’s strongest telephone customer-privacy rules

OLYMPIA, Wash. – State regulators today adopted the nation’s strongest rules protecting telephone customer privacy. The new rules prohibit telephone companies from selling a Washington customer’s telephone records or using the information to market unrelated services, unless the customer has given permission.

Link to Order

Link to Rulemaking Page

The Washington Utilities and Transportation Commission (WUTC) adopted rules that go further to protect customer privacy than rules adopted in July by the Federal Communications Commission (FCC). The rules take effect Jan. 1, 2003.

“Customers have been clear: They want to control the most sensitive information about whom, when, and where they call,” said WUTC Chairwoman Marilyn Showalter. “The national rules did not give them this protection, so we concluded that state rules were necessary.”

The WUTC began working on privacy rules late last year, when Qwest distributed confusing notices telling customers that their information could be used or sold unless the customer opted out of the data-sharing plan. Many customers did not realize the effect of the notice, and other customers reported many difficulties when they tried to tell Qwest not to use their information. In the face of criticism from customers and regulators, Qwest withdrew its information-sharing plan, and Verizon dropped its Washington customers from a similar plan.

“These rules leave the telephone companies plenty of room to communicate with their own customers about their telecom services,” said Commissioner Patrick Oshie. “But they have to tell the customers what is happening and give customers workable methods to protect their privacy. The experience with Qwest last winter showed us that we need stronger protections than the federal rules provide.”

The three-member commission adopted the rules in a split decision. Chairwoman Showalter and Commissioner Oshie voted to adopt the rules. Commissioner Richard Hemstad dissented from the majority opinion. Commissioner Hemstad believes that the controlling federal statute requires a telephone company, without distinguishing between more or less sensitive information, to obtain the express approval of a customer before it may use customer-specific calling records for any marketing purpose.

“Congress constructed a section of law that has as its unmistakable aim the protection of the confidentiality of customer information, and it placed the customer in charge of that confidentiality, not telecommunications companies and not regulatory agencies,” Hemstad said in his written opinion. “I believe ‘approval’ can mean only an affirmative statement by a customer, not an assumption of approval based on the absence of disapproval,” he added.

A federal law enacted in 1996 prohibits telephone companies from using private customer information without the customer’s approval. The telecommunications companies successfully challenged in federal court the first rules adopted by federal regulators, prompting both the state and federal agencies to review their rules. The revised federal rules enacted in July require customers to opt-out if they do not want the telephone company to use the information for marketing other services and share it with related companies. Under the federal rules, a company has to get the customer’s express approval only if it wants to share the information with unrelated companies or use the information to market non-telecommunications services.

“We think our new rule will stand up in court, and we hope the FCC will not try to pre-empt it,” Showalter said. Verizon recently asked federal regulators to prohibit states – Washington in particular – from adopting stronger privacy rules.

Here are some highlights of the stronger provisions of the Washington rules:

The Washington rules give extra protection, compared to the federal rules, to “call detail.” Call detail is the information about whom, where, and when a customer makes calls. Under the state rules, even the telephone company itself – without express approval by the customer, cannot use this information for marketing other services.
The Washington rules draw a tighter circle around data sharing within the “corporate family.” Federal rules allow a telephone company share customer information with all of its “joint-venture partners” and “contractors.” For example, Qwest could share information with an Internet service provider, such as MSN or AOL, if it is a joint-venture partner. State rules limit the sharing to companies that are under common ownership, such as Qwest’s wireline and wireless companies.
The Washington rules require telephone companies to provide better customer notices and easier methods for customers to opt-out of information sharing.

The WUTC rules apply to local and long-distance telecommunications companies providing service in Washington. The rules do not protect customers of wireless companies, because wireless companies are exempt from WUTC regulation.

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