WASHINGTON -- A court ruling overturning federal protection oftelephone customer records puts the interests of phone companies overthe rights of consumers, a top federal regulator says.
The Federal Communications Commission plans to appeal the decisionby the three-judge panel of the 10th U.S. Circuit Court of Appeals,which could enable phone companies to use information about customersfor marketing purposes without obtaining their consent.
FCC Chairman Bill Kennard said the court's decision to reject thecommission's rules remove important protections to consumer privacy.
"I think it's a sad day when the First Amendment rights oftelephone companies to solicit business outweighs the rights ofconsumers to protect their privacy," Kennard said Tuesday.
Information such as calls made to a doctor or to a help-group andthe frequency of such calls could become fodder for marketers totarget their goods, he said.
When people make calls or pages, the companies providing themservice end up with personal information including who, when and forhow long the call lasted. They can also tell how much theircustomers spent for service.
The FCC rules adopted in 1998 had required telecommunicationscompanies to obtain permission either written, oral or electronicbefore using or sharing customers' records, calling patterns andother personal information to market new services to them. A 1996telecommunications law had mandated such approval without specifyinghow it had to be given.
In a 2-1 ruling published last week, the panel vacated the FCCrestrictions, saying they wrongly interfered with the phonecompanies' First Amendment right to free speech. The court said thegovernment failed to show any specific harm to customers from thepractice.
"This case is a harbinger of difficulties encountered in this ageof exploding information, when rights bestowed by the United StatesConstitution must be guarded as vigilantly as in the days ofhandbills on public sidewalks," the ruling said.
As for customers' privacy, "Although we may feel uncomfortableknowing that our personal information is circulating in the world, welive in an open society where information may pass freely," theruling said.
Kennard expressed concern that the ruling would give rise to an"opt out" approach, with companies assuming they had permission touse customers' personal information unless customers told them theydid not. Customers might then inadvertently forfeit their right toprivacy by missing a notice from the company informing them of thepolicy, he said.
Other FCC officials warned that the decision could open a widedoor for releasing information, such as phone companies sellinginformation about a customer's toll-free catalog shopping habits to arival retailer.
Denver-based U S West, which brought the case, said it does notintend to share customers' personal information with other companiesonly with its divisions. The company also says that the ruling mightspare consumers some sales calls by letting companies targetcustomer's perceived needs.
But Kennard said he was not convinced that all companies wouldabide by the same standard.
"Some of them will find it just too tempting not to go ahead andsell this information to the highest bidder," he said.
The FCC plans to ask for a rehearing by the full 10th Circuit.
Privacy groups also have expressed concern that the decision couldset a precedent for privacy protections in other areas, such as theInternet.
"This really does cast doubt on the government's ability toprotect citizens' privacy," said John Morris, counsel at the Centerfor Democracy and Technology, a Washington-based privacy advocacygroup. The court's analysis "may make it much more difficult toenact privacy legislation in other areas."
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