STATEMENT OF JOHN STANGLAND, ASSISTANT VICE PRESIDENT FOR PRODUCT DEVELOPMENT AND MANAGEMENT, PACIFIC BELL

Mr. Stangland. Thank you, Mr. Chairman, members of the committee. My name is John Stangland. I am the assistant vice president for product development and management for Pacific Bell.

It is a pleasure to be here this morning and present a one company, one State, perspective on the introduction of a very valuable set of new telecommunications services to the customers in California.

Pacific Bell does plan to offer a full set of seven new custom local area signaling services to California customers. Caller ID is an essential feature in this set. We also plan to include per call privacy at no charge. These services and their operational characteristics are spelled out in detail in an attachment to my written testimony.

As background for my comments, it is valuable to know that we have been formally working on deployment strategies and plans for these services since 1985, and plan initial implementation with regulatory approval in October 1991. The significant time interval is driven by both the magnitude of the task, of deploying both the CLASS features and the supporting network infrastructure, and our desire to provide ubiquity and connectivity for these services in those areas where it is introduced, San Francisco and Los Angeles initially.

Throughout the activity associated with the development of these new products, I would characterize our direction as being one of intense customer focus. For example, we work with the switch vendors to design and deploy upgrades to the software which make these features easier for the customers to understand and use. With early recognition of the privacy issue, we have been working with a wide variety of consumer and professional groups in both a learning and educational role, making sure that the services and both sides of the privacy issue are fully understood.

Also, we have conducted four distinct sets of primary market research. The last one in 1989 focused specifically on the privacy issue associated with Caller ID and the options for dealing with it. All of this input resulted in a series of analyses and a thorough consideration of several deployment options for Caller ID. These options are spelled out in detail in my written testimony.

For numerous reasons, ranging from relative value provided by the Caller ID feature to technical feasibility, the per call privacy option was selected. We strongly believe that per call privacy provides the optimum solution for California customers. It clearly balances the opposing views on privacy, calling party versus call ed; it maintains the value of the Caller ID feature and the related CLASS features; it is consistent with what our customers have told us in our market research efforts, research which also indicates that support for this position grows with understanding.

Our decision to include per call privacy in our tariff proposal with the California Public Utilities Commission left us in a unique position to assist Assemblyman Jerry Eaves when he drafted legislation to deal with caller identification products in California. Our position is in full compliance with this new law and we believe in compliance with all legal requirements.

All of this brings us to today. We are in the middle stages of what will be for us about an 8-year product deployment cycle. Regulatory industry and market forces are beginning to shape a full understanding of this product and its value to customers. We have selected an implementation option for Pacific Bell customers in California which we strongly believe will enable these new products to enhance the elements of choice, convenience and safety in the lives of our customers.

Thank you.

Mr. Kastenmeier. Thank you very much, Mr. Stangland.

[The prepared statement of Mr. Stangland follows:]

STATEMENT OF JOHN STANGLAND. ASSISTANT VICE PRESIDENT
FOR PRODUCT DEVELOPMENT AND MANAGEMENT. PACIFIC BELL

INTRODUCTION

My name is John Stangland, and I am the Assistant Vice President for Product Development and Management at Pacific Bell' ("Pacific"). In this position, I have been part of the team that is actively developing Pacific's "Caller ID" product, as well as other Custom Local Area Signaling Services (see Attachment 1 for a description of these "CLASS" products).

First, allow me to thank you for this opportunity to discuss Caller ID. Pacific has targeted late 1991 for initial introduction of the Caller ID product. This exciting new service will allow telephone customers to see on a display screen the telephone number of the calling party before answering the phone.

We are moving forward with Caller ID and the other exciting CLASS features because they promise to add greater choice, convenience, and safety to our customers' lives. We at Pacific Bell believe that, given a thoughtful approach to customer privacy needs, virtually everyone in California could benefit from some application of this technology.

This hearing provides a unique forum to discuss Pacific Bell's approach to the privacy concerns associated with the offering of Caller ID. Pacific's solution — Per Call Privacy — gives all its California customers the capability of preventing their number from being displayed to the called party.

Caller ID: A New Service with Limited Deployment Nationwide

Because Caller ID has very limited deployment to date, both the industry and the states are only now beginning to deal with the inherent privacy issues. Pacific believes that it would be prudent for Congress to wait and see how initial offerings work out and to consider the regulatory experiences of various states before mandating national standards, we plan to work within the industry to ensure that the privacy concerns of our California customers are honored throughout the country as our networks interconnect with those of the other common carriers (please see Attachment 2 for some examples of Per Call Privacy calling scenarios).

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Per Call Privacv: The Best Solution for California

Pacific Bell will be offering Per Call Privacy in California because we believe that it is the most balanced alternative for our customers. Unlike the other options which I will discuss in some detail, this one allows the parties involved in the call to make decisions about their needs for privacy.

Pacific's position on Caller ID was borne out of extensive consumer research. That research, along with our knowledge of the California marketplace, tells us that Per Call Privacy or blocking is the most effective means of balancing the privacy concerns of all our customers. Further, our research shows that Per Call Privacy will not undermine the value of the product (though our research may differ from research in other regions). Our approach makes sense from a marketing, consumer, and public policy point of view for our customers.

Let me make clear that Pacific is not on a campaign to promote our approach as a national standard, nor are we passing judgment on the approach taken by others in other parts of the country.

CALLER ID IN CALIFORNIA

Let me begin by briefly describing some of the benefits of the Caller ID product as it will be offered in California.

Caller ID will be extremely helpful in medical or police emergencies, or in enabling you to identify an important call from a family member or a business client. Caller ID will help you decide if you wish to answer and, if so, how.

When you are busy, this service will allow you to answer important calls and make a note of calls to return. For example, imagine that you are home alone dealing with a sick child, waiting for the doctor to call, when the telephone rings. Rather than divert your attention for any length of time from the child, you can simply glance at the number flashing on your screen. If it is not the doctor, you may want to return the call at a more convenient time.

On the other hand, when you are the calling party, there may be instances when to retain your privacy you may not want your number displayed. For example, a caller has a right to privacy when calling from a battered woman's shelter; or someone may want to remain anonymous when gathering quotes on merchandise to avoid unwanted follow-up sales calls.

There also may be times when you want your number delivered as when you are calling someone who is waiting to hear from you on an urgent matter.

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Automatic Number Identification (AND

You should also be aware that Caller ID is not the only technology that delivers your telephone number to the called party. Even when using Per Call Privacy, your telephone number may be delivered to an "800" or "900" number service subscriber.

This technology is known as Automatic Number Identification or "ANI." This information has traditionally been passed within the telephone network for billing and routing purposes only. However, today, some long distance carriers have started passing ANI information to the called party as part of their own service offerings. In this situation the calling party has no control over the forwarding of ANI.

However, a solution to this problem is on the horizon. With the deployment of Common Channel Signaling System 7*, upon which the CLASS features are based, the network can forward routing and billing information separate from the information needed to provide customer services. This will allow for customer control of calling party identification.

CALLER ID: THE PUBLIC POLICY DEBATE

This new technical capability has caused a reassessment of the importance of privacy in telecommunications.

Some contend that Caller ID is appropriate because it increases the called party's privacy. Not only can the recipients screen their calls, they have some ability to hold callers accountable for their actions or statements on the telephone. Others object to Caller ID because, by losing their anonymity, they may be subjected to subsequent invasions of privacy by the receiving party.

The privacy issues are complex since the strong opposing views can be considered equally valid.