Mr. KASTENMEIER. Thank you very much for your brief but very informative statement, Mr. Amick. We will proceed, however, with Mr. Kelly and then have perhaps questions of you both.

Mr. Kelly.

Mr. KELLY. Thank you, Mr. Chairman.

Mr. Chairman and members of the subcommittee:

My name is John W. Kelly, Jr. I am an attorney with Southwestern Bell Telephone Co. and I am appearing before this committee on its behalf and on behalf of its parent company, Southwestern Bell Corp. concerning H.R. 3378, the Electronic Communications Privacy Act of 1985.

Southwestern Bell Corp. was formed during the reorganization of the former Bell system pursuant to judicial decree. Southwestern Bell Corp.'s subsidiaries include Southwestern Bell Telephone Co. and Southwestern Bell Mobile Systems, Inc.

Southwestern Bell Telephone Co. provides exchange, exchange access, and information access telecommunication services to its subscribers in the States of Missouri, Kansas, Arkansas, Oklahoma, and Texas.

Southwestern Bell Mobile Systems also provides services in these same five States involving cellular mobile telephone service.

Both companies under current law are communications common carriers and under the bill you are now considering would be classified as electronic communications providers. In either case, these firms are in the business of providing communications services to the public and support the intent of the proposed legislation as necessary and desirable in advancing the protections afforded by law to all forms of electronic communications.

Southwestern Bell has always stressed the singular importance of the privacy of our customers' communications. Our commitment to the protection of that privacy has not diminished because of the reorganization of the former Bell system.

We continue to believe that telecommunications users have an inherent right to the privacy of their communications-whether spoken or in the data transmission form-and regardless of the identify of the carrier who is providing service to that consumer or the technology used to provide such service.

The statute which H.R. 3378 would amend was enacted as a part of the Omnibus Crime Control and Safe Streets Act of 1968. In pertinent part, that legislation codified the protections afforded to telephone conversations and the procedures necessary for court authorized interception of those communications.

The 1968 legislation was appropriate for its time as to the state of the then current technology, the types of information which were transmitted, and the structure and regulation of the telecommunications industry.

The 1968 legislation is not, however, adequate almost two decades later for a number of reasons. Principal among these are: One, the dramatic changes in the structure of the telecommunications industry; two, the changing uses of the telecommunications services by the consuming public, both residential and business; and three, the constant and pervasive changes in the telecommunica

In combination, these changes have diluted the protections of the 1968 statute. By the same token, these deficiencies would, in our view, be cured by the proposed legislation. A brief examination of these areas is appropriate.

Prior to 1968, telecommunications services were provided almost exclusively by communications common carriers which were franchised to provide local service and which provided long distance service in partnership with one another. Almost without exception. these carriers were not subject to competition.

In contrast there is almost no aspect of telecommunications, or the broader field of electronic communications, which today is not competitive, with multiple suppliers capable and willing to provide alternatives to the once sole supplier.

H.R. 3378 recognizes this change in industry structure and extends the protections and privileges established by the 1968 law to all providers of the electronic communications services. Such a change is both necessary and appropriate-necessary to reflect the multiplicity of providers of electronic communications and appro priate to secure the same degree of protection to a consumer, re gardless of his or her choice of vendor. The thing to be protected here is the privacy of communication, regardless of the identity of the carrier.

In 1968, the vast majority of all telephone communications were by the spoken word. That spoken word was protected from the unauthorized interception by the legislation passed in that year. By today's standards, computers were in their infancy and communication between computers was infrequent and unsophisticated. Given the state of the art and the usage of that art, it is not sur prising that the 1968 law did not protect data transmissions from unauthorized interception.

Today, of course, the situation has changed dramatically. Data transmissions of all kinds are made by the thousands each day within a city or across the country. Data processing and the need for data transmission have increased substantially.

During the period 1972 through 1985, the growth rate in shipments of data processing equipment alone averaged approximately 17 percent annually versus an approximate 9-percent growth rate in telephone equipment, and an approximate 4-percent growth in gross national product.

For purposes of this legislation, it is not necessary to inquire into the causes of such a dramatic growth in data transmission. The fact is that modern American industry transmits highly confidential data in bulk on a daily basis and, in all probability, could not efficiently operate in any other manner. The data transmitted by such means is equally deserving, with voice communications, of protection against unauthorized interception.

H.R. 3378 achieves this goal by its redefinition of the term "interception" and thus resolves a problem which has existed since the passage of the 1968 legislation.

It would be an understatement to observe that the electronic communications industry has experienced significant technological advances in the past 20 years. Some of these changes include the development of transmission media other than wire and radio, as

Southwestern Bell Mobile Systems, Inc.

Southwestern Bell

Telephone Company provides exchange and exchange/information

access telecommunication service to its subscribers in

Missouri, Kansas, Arkansas, Oklahoma and Texas.

Southwestern Bell Mobile Systems provides cellular mobile

telephone service in the same five-state area.

Both companies are, under current law,

communications common carriers and, under the Bill you are now considering, would be classified as electronic communications providers. In either case, these firms are in the business of providing communications services to the public and support the intent of the proposed legislation as necessary and desirable in advancing the protections afforded by law to all forms of electronic communications.

Southwestern Bell has always stressed the singular importance of the privacy of our customers' communications. Our commitment to the protection of that privacy has not diminished because of the reorganization of the former Bell System. We continue to believe that telecommunications users have an inherent right to the privacy of their communications--whether spoken or in data transmission form--and regardless of the identity of the carrier who is providing service to that consumer or the technology used to provide such service.

The statute which H.R. 3378 would amend was enacted as a part of the Omnibus Crime Control and Safe

codified the protections afforded to telephone conversations

and the procedures necessary for Court authorized

interception of those communications.

The 1968 legislation

was appropriate for its time, as to the state of then current technology, the types of information which were transmitted, and the structure and regulation of the telecommunications industry.

The 1968 legislation is not, however, adequate almost two decades later for a number of reasons. Principal among these are (1) the dramatic changes in the structure of the telecommunications industry; (2) the changing uses of telecommunications services by the consuming public, both residential and business; and (3) the constant and pervasive changes in telecommunications technology.

In combination,

these changes have diluted the protections of the 1968 statute. By the same token, these deficiencies would, in our view, be cured by the proposed legislation. A brief examination of these areas is appropriate.

Prior to 1968, telecommunications services were

provided almost exclusively by communications common carriers which were franchised to provide local service and which provided long distance service in partnership with one another. Almost without exception, these carriers were not subject to competition. In contrast, there is almost no aspect of telecommunications (or the broader field of

with multiple suppliers capable and willing to provide an alternative to the once sole supplier.

H.R. 3378 recognizes this change in industry

structure and extends the protections and privileges

established by the 1968 law to all providers of electronic communications services. Such a change is both necessary

and appropriate--necessary to reflect the multiplicity of providers of electronic communications and appropriate to secure the same degree of protection to a consumer, regardless of his or her choice of vendor. The thing to be protected here is the privacy of communication, regardless of the identity of the carrier.

2)

Changes in Consumers' Uses of Communication.

In 1968, the vast majority of all telephone

communications were by the spoken word. That spoken word was protected from unauthorized interception by the legislation posed in that year. By today's standards, computers were in their infancy and communication between computers was infrequent and unsophisticated.

Given the

state of the art and the usage of that art, it is not surprising that the 1968 law did not protect data

transmissions from unauthorized interception.

Today, of course, the situation has changed

dramatically. Data transmissions of all kinds are made by the thousands each day within a city or across the country. Data processing and the need for data transmission have