Privacy code 'would bring higher costs'

By Rob Hosking

Friday 16th November 2001

Telecommunications providers could face significant cost increases if a proposed privacy code for the industry is adopted.

One proposal contained in the code requires the last three digits from telephone numbers to be omitted from telephone bills, so that other people cannot see who was called.

"There are significant costs involved with configuring systems to make that happen," lawyer Liz Longworth, who acts for Clear Communications, Vodafone and Telstra Saturn, told a privacy forum in Wellington yesterday. Users in a situation where a telephone was shared would also find this inconvenient when deciding who owed what for toll calls, he said.

The proposed code, which allows the industry to vary its compliance with the Privacy Act, is likely to be presented to the industry and wider groups before Christmas.

There was a need for the final code to be a balance between privacy rights and the ability of the industry to carry on its business, she said.

"At the moment it has a little way to go before it gets that required balance."

The carriers themselves increasingly see the building of customer confidence as a key part of their marketing and regulators should take account of this in determining new rules, she said.

"It is not good business to undermine personal privacy."

A further concern of telecommunications carriers is that they may find themselves under tighter restrictions, when trying to contact their existing customers, than other businesses.

The code contains rules on the holding and maintenance of customer data - traffic information, billing, who was called, when, how long for, and so forth.

"There is an issue for telcos when other firms could have fewer constraints than telcos."

All carriers retain their traffic information for future use, and indeed there are some legal requirements they do so in order to help the police if necessary. Concern was also expressed at the forum - organised by the Office of the Privacy Commissioner - about other new technologies, such as direct marketing to users of cellphones.

Because cellphone networks automatically monitor where the user is, new- generation technologies could allow marketers to send text messages about CD sales, for example, as a user walked past a music store. Furthermore, such marketing messages could be based on that person's previous purchases.

Direct Marketing Association chief executive Keith Norris acknowledged the superiority of the telephone to other forms of direct marketing - "no one jumps out of the bath to empty the mail box" - but said that customer tolerance would be a natural constraint on new technologies.

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