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Remaking 411 to include wireless phone numbers

By Tricia Duryee
Seattle Times Technology reporter

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The question is a running joke at the Portland company, where Cox says being a technologist in telecommunications is like being the first Homo sapiens in human evolution.

"We are doing good things, but they are also boring," said Cox, who is reminded daily of his status by the 15 patents hanging on his office wall.

Cox said he's preferred lurking in the background all these years, but his time for the shadows is over. Late last year, Qsent was chosen to create a system that would integrate wireless phone numbers into the existing 411 directory.

In winning the exclusive contract, the startup was thrust into the spotlight and found itself deep in one of the more contentious issues surrounding wireless phones today: how to straddle the line between those who want to be listed in a directory and those who say it violates privacy.

How a wireless directory might work is the subject of debate among the wireless industry, privacy advocates and regulators. And Congress is considering legislation that would dictate how the system would be set up.

Wireless directory Major carriers participating: Cingular Wireless, T-Mobile USA, Nextel Communications, Sprint PCS and Alltel Major carrier not participating: Verizon Wireless Timeline: In early 2005, the Qsent database is scheduled to be ready for carriers. In the spring, carriers will start asking customers whether they want to opt in to the directory. In late 2005, wireless numbers will start showing up in the 411 directory.

For the past year, Qsent has been working on a system proposed by wireless carriers. Under this system, customers would give their consent to be included. If they did nothing, they would not be listed. In or out of the directory, there would be no charge.

If one signs up, his or her number would be available by calling 411 — it would not be printed, distributed on the Internet or sold to telemarketers. Someone who opts in can call and opt out almost instantly.

"We are interested in providing it for those who want it," said Rochelle Cohen, a spokeswoman with AT&T Wireless, now part of Atlanta-based Cingular Wireless. "Businesses that have landlines are already listed, whereas businesses with wireless phones are at a competitive disadvantage. For those whose wireless phone is their only phone, they should have the opportunity to be available to friends and family if they choose."

Besides Cingular, T-Mobile USA, Nextel Communications, Sprint PCS and Alltel have signed up to be part of the system. The notable exception is Verizon Wireless, which before the Cingular-AT&T Wireless merger was the No. 1 carrier in the U.S., with 42.1 million subscribers.

Cost of unwanted calls

While the carriers may be eager to get the directory in place, others are less sure. Because subscribers take cellphones with them everywhere and leave them on day and night, the argument goes that they may feel vulnerable to the odd phone call they don't want to receive or pay for.

Since July, 16,000 people have logged on to www.escapecellhell.org to send 50,000 pre-formatted letters to their senators and representatives, urging them to act quickly to pass legislation before the industry launches a directory. Both houses of Congress have held hearings on the matter.

In testimony before the Senate, Verizon Wireless Chief Executive Dennis Strigl said: "We at Verizon Wireless think a wireless telephone directory would be a terrible idea, and we will not publish our customers' cellphone numbers or otherwise participate in the plan you have heard about today."

Qsent Manager of wireless phone numbers in the 411 directory Headquarters: Portland Chief executive: Patrick Cox Founded: 1998, by Cox, President Kevin Anderson and Chief Privacy Officer Greg Keene Employees: 60 Venture capital: Raised about $46 million

In September, California Gov. Arnold Schwarzenegger signed a bill letting residents decide whether they want their cellphone number included in a directory — by written consent.

Marc Rotenberg, executive director of the Electronic Privacy Information Center (EPIC) in Washington, D.C., said legislation is crucial because even if the industry supports a standard that consumers are comfortable with today, it doesn't mean the industry won't change its mind tomorrow.

"I think everyone is in agreement for the need for strong privacy protection. The debate is on how it's going to be done," Rotenberg said.

Fewer home phones

The arguments come as the telecom landscape changes quickly.

Kathleen Pierz, managing partner of The Pierz Group, a research firm, said based on a survey, 10 percent of Americans don't have a home phone anymore. That number increases to 21 percent for Americans under age 24.

Also, small-business owners, from plumbers to real-estate agents, need a way for customers to reach them at all hours. An agent's misplaced cellphone number can make the difference between a sale or not.

"There's nothing more frustrating than trying to track down your real-estate agent," said Edward Krigsman, lead broker with the Krigsman Group with John L. Scott in Seattle. "I would list. I would have to have something in the 411 cellphone directory. I would not want to miss out in having my name in there."

Those factors are part of what's expected to drive adoption. Based on the survey, Pierz said, more than half, or 53 percent, of the roughly 169 million subscribers in the U.S. will list their cellphone number in the first two years.

"Over time, you could expect that number to grow," she said.

Qsent growth

If that number grows, it's likely Qsent's business grows with it.

The Portland company, which raised more than $46 million in venture capital from investors, including Seattle-based Maveron and Voyager Capital, started out in 2000 creating directories of radio stations and limo or taxi services. When that business didn't pan out, CEO Cox looked for something closer to home.

Before starting Qsent, Cox and Qsent President Kevin Anderson co-founded Metro One Telecommunications, also based in Portland. Under their guidance, that company became the largest publicly traded independent provider of voice-based directory-assistance services in the U.S.

Today, it's an industry that generates 8 billion calls a year, not including online searches, Cox said.

"It's highly successful. It's a fundamental part of life," he added.

The idea first expanded into the wireless industry almost three years ago when the major carriers approached the industry's trade organization, the Cellular Telephone and Internet Association (CTIA), to research the idea.

On a practical level, the carriers realized they would have to team up in order to get a directory out. Otherwise, an operator assisting a caller would have to search six or more databases to find a requested number, said Brad Blanken, CTIA's former assistant vice president for technology programs, who worked on the project until leaving recently for a new job.

The incentive for carriers to roll out a directory is not in the money they would receive from customer fees. Instead, they saw an opportunity to generate additional minutes used by the wireless subscribers, Blanken said.

Pierz said that as a result of having their wireless numbers included in a directory, consumers can expect about three to five additional calls per year for an additional cost of 45 cents a month. "Or one one-hundredth of an average phone bill," she said. "If it's a call you wanted, it's not much."

In March 2003, CTIA put out a request to 30 companies asking them to suggest a possible directory. Of those 30 requests, CTIA received 13 responses, including one from Qsent, which eventually was selected.

Some of the other ideas included a call-forwarding feature in which the operator actually places the call to the requested number without ever disclosing the number itself.

Another idea was to allow the party being called the option of answering the phone or not after the caller's identity is disclosed. Other scenarios included charging a fee to opt out of a directory, an idea privacy experts chastised.

Confusing to public

The directory idea has taken a lot of heat because of misinformation spread in the early days, industry officials say.

"That's one issue we've totally screwed up and were behind the curve on informing consumers and the media about," said Steve Largent, chairman and chief executive of CTIA. "We've learned our lesson."

Pierz agreed that CTIA did a poor job informing the public.

"There's been a lot of bad information out there saying their number is going to be dumped wholesale into a directory when in fact they've taken some very deliberate steps to privacy," she said.

Qsent, for instance, maintains two databases: one that is searched to see if a person has opted to include his or her cellphone number and another in which the numbers are actually stored.

The two-prong approach keeps the numbers from being available in a list format, a precaution taken so that it will never land in the hands of telemarketers or others, Qsent contends.

Largent said the industry does not need regulating, that there will always be an option for the consumer who doesn't want to be included.

What worries Largent is state-by-state regulation, which he thinks will stifle competition and innovation.

"My fear is that the carriers will say, 'Forget it; we are just not even going to go down that road,' " he said. If a carrier has to conduct business 50 different ways, "you can imagine the additional cost and regulatory nightmare that you have created."

Rotenberg of EPIC said consumers are at risk because policies can change over time.

"After announcing a privacy policy, a company will revise it," he said. "We think the more sensible approach is — at the front end — to support legislation that locks in best practices."

Expansion plans

Meanwhile, original projections called for the system Qsent is developing to be launched as soon as next year. Now, there's no official launch date, Cox said.

Still, the company continues to push forward and plans to hire aggressively to expand its staff of 60 employees.

Although congressional hearings have taken up a lot of the company's time and attention, Cox said the directory may come out "possibly in four to six months."

Is he disappointed in how things have played out?

"Disappointed is not the word," he said. "It is what it is."

Tricia Duryee: 206-464-3283 or tduryee@seattletimes.com

Copyright © 2004 The Seattle Times Company

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