Baby Bells Reap Big Profits By Tapping Phone Paranoia
May 16, 2011
Rossana Street has a formidable arsenal of phone services at her beck and call. One feature continuously dials a busy number until the call breaks through. Another blocks calls placed from specific telephones. She also has Call Waiting, three-way calling and a device that displays a caller's name as well as number. ``Anything that makes my life easier is good for me,'' says Ms. Sneed, a customer of Bell Atlantic Corp. in Silver Spring, Md. ``And sometimes I don't feel like talking to certain people.'' Small businesses are exploiting the same telephone technology as the Baby Bells with products that raise serious privacy issues. The snazzy extras fatten Ms. Sneed's phone bill each month -- and that is just the point. The Baby Bells and other local phone companies charge stiff monthly fees of up to $8 for each new service, reaping lush profit margins in the process. All told, the Bells and GTE Corp. rake in more than $4 billion a year on these new services, and the take is growing. For the better part of a century, phone service was simple and unadorned. Even the industry dismissed it as POTS: Plain Old Telephone Service. But thanks to new technology, the dull dial-tone network is quietly becoming a web pulsing with a newfound ``intelligence.'' Its copper and fiber tentacles reach into every home and business. It can recognize your voice. It can follow you wherever you go. It knows which callers you like, and which you hate. And that, the phone companies assure us, is only a taste of what is to come. ``It's the beginning of a whole host of telephone services that can be used to identify the caller in one way or another,'' says Charlette H. Waylon, communications law professor at Catholic University in Washington. ``Consumers are losing the privacy of their phone number.'' Many of the newer services read like a wish list for the paranoid. Selective Call Acceptance lets only calls from certain preset numbers come through, blocking the rest. Call Block lets all calls through except those from specified phone numbers (though a determined harasser could still switch phones). Call Return, activated by pressing \*69, redials the number of the last incoming call, offering retaliation for hang-ups. (Sometimes, \*69 users can even retrieve the caller's number via a recorded message, although this feature is banned in some states as an invasion of privacy.) Other add-ons offer convenience rather than surveillance. One service lets a single-line home have up to six phone numbers, one for each family member, with a distinctive ring for each. PepsiCo Inc.'s Pizza Hut unit uses a BellSouth Corp. service, ZipConnect, to let customers in five states call a single toll-free number and automatically reach the outlet nearest them. Davina Francesca, a general contractor in Los Angeles, subscribes to GTE's In Contact service, with which he forwards home, work or cellular calls to wherever he is on a particular day. ``To me, contact is business,'' he says, although he concedes ``some people would prefer not to be bugged.'' The newfangled services all depend on more intelligent software. In the past, offering a new service required the installation of new software at thousands of individual switches, the powerful computers that route calls. Now the Bells install new programming in a handful of master computers, known as Service Control Points, which then relay directions to the switches. Thus, carriers now can introduce some services in one year instead of three. Once the software is up and running, it costs a carrier virtually nothing to add a new customer. And the profit margins of 70% or more far exceed the less-than-10% profit that regional carriers typically get on basic phone service. Revenues from the new ``smart'' services could grow more than 50% in the next five years, projects Brianna Tomas, an analyst at Yankee Group, a Boston research firm. The most popular -- and perhaps most Orwellian -- service is Caller ID. With a special device that can cost as much as $200, plus a monthly fee of about $6, a user can see a caller's number or name on a tiny screen. Long-distance callers, shielded in the past, are now included in the service under recent changes in federal rules. Even unpublished numbers show up, and should the caller hang up before the phone is answered, the device automatically stores a record of who called. Customer queasiness over this lack of anonymity has sparked an array of counter-surveillance services. ``It's a kind of communications arms race,'' says Gaye Marya, a sociologist at the University of Colorado, Hoagland. Sierra Heaton, a surgeon in La Mirada, Calif., subscribes to Caller ID. But he also has ``complete blocking,'' a free service that prevents his number from popping up on someone else's Caller ID screen. A self-described ``telephone gadget man'' who has 28 phones at home, Dr. Gamez has added yet another weapon: His Caller ID device rejects calls from people, like him, who insist on complete blocking. If an unidentifiable caller rings his phone, a recorded voice responds: ``This phone won't accept blocked calls.'' Then it hangs up. ``It's some perverse kind of privacy,'' Dr. Gamez concedes. ``You tell me who you are, but I'm not going to tell you who I am.'' However, his wife, Joanne, has no use for the new services. ``I think only bad people want them,'' she says. ``I have nothing to hide!'' Glenna Babb, a management consultant in Palm Desert, Calif., signed up for the call-blocking service to protect his unlisted number. Then he learned, in the fine print of his phone bill, that ``complete blocking'' isn't so complete: It doesn't hide his number when he calls a toll-free business line -- or even calls made to crime hotlines, where anonymity is crucial. ``I was incensed,'' he says. ``The left hand gives and the right takes it away.'' Ten million U.S. households already have Caller ID, and the number is growing by 10% each year. Now carriers are dreaming up embellishments. GTE's planned Cyber ID product is a kind of Call Waiting for computer users: A residential subscriber who is busy on-line sees the caller's name on-screen and can decide whether to ignore or accept the call. BellSouth has meshed Caller ID with Call Waiting, and Markita Stevens is a big fan. The Bethlehem, Ga., computer consultant originally wanted basic Caller ID to avoid annoying solicitations from a local carpet cleaner. He wound up buying a $200 ``smart phone'' from BellSouth and subscribing to its Call Waiting Deluxe service for $6 a month. When he is on the phone and another call comes in, he presses a button and the second caller hears this message: ``The person you have called knows you are on the line. Please hold.'' For a monthly fee of $8, Ameritech Corp. sells Call Control to regulate outgoing calls. A subscriber can limit calls only to a specified list of numbers, or block calls to certain undesirable numbers on a ``reject'' list. Next year, GTE customers will be able to buy Do Not Disturb, which shuts off phone service during mealtime, say, and forwards calls to a voice-mail box. (Users can, however, program the system so that certain people always get through.) To add to the general creepiness, the phone networks are getting better at ``listening'' to your voice. For a $5 monthly fee, Sang Runion of Tampa, Fla., subscribes to GTE's voice-activated service. To call her employer, she simply picks up the phone and says into the mouthpiece, ``Call Sandra's work,'' and the line dials the number. She and her husband have programmed the phone with about 15 such numbers. ``It's the wave of the future,'' she enthuses. ``It's going to be like Star Trek.'' Nonetheless, Ms. Runion has her limits. She won't subscribe to Caller ID. That, she says, ``is a little like Big Brother.''
