Telemarketers' Next Target: Cell Phones


Ben Swinburn, a resident of San Francisco, answered his phone 18 months ago to hear a recorded ad for a casino outfit that operates in Las Vegas and elsewhere. He hung up, but the casino hasn't taken the hint: It has been leaving messages for Swinburn at least once a month ever since.

So what's the big deal? Well, it could become one: Instead of pestering Swinburn at home, this telemarketer has been leaving messages on his cell phone, turning the 4,350 monthly minutes that Swinburn's Verizon (VZ) calling plan provides into an anytime/anywhere pain in the neck.

ACCIDENTS WILL HAPPEN. For most of their brief history, telemarketers have stuck to landline phones. But that could soon change, says Rene Link, vice-president for marketing at wireless consultancy InCode Telecom in San Diego. Soon after the Federal Communications Commission (FCC) implements its wireless number portability rules on Nov. 24, it's expected that most phone customers will also be able to keep the same number when they switch from regular landline to wireless service. And as that happens, telemarketers almost certainly will start reaching people via their mobile phones.

Theoretically, that trend could snowball. Within five years, 20% of U.S. households, up from 5% today, might use a mobile device as their primary phone, estimates Craig Mathias, who runs wireless consultancy Farpoint Group in Ashland, Mass.

To start, at least, a fair number of telemarketing calls to wireless phones will be accidental. Today, direct marketers have no way to determine that a wireline number they've been calling has morphed into a cell-phone number. The FCC, which regulates phone carriers, has yet to find a way to remedy that -- and the solution will likely not present itself by Nov. 24, says Jim Conway, vice-president for government relations of the Direct Marketing Assn. (DMA), which has 4,700 members, many of them telemarketers.

PLENTY OF EXEMPTIONS. Even after the distinction becomes clearer, though, some telemarketers are bound to target cell-phone numbers. They'll do so in an effort to offset the effects of another new FCC initiative -- the national do-not-call registry. Though it still faces court challenges, 51 million Americans have signed up. And assuming it takes effect in its current form, telemarketers could face an $11,000-per-violation fine for ignoring it.

Moreover, the don't-call rules will leave plenty of leeway for telemarketers to track down wireless customers. Callers that are exempt from the rules include charities, politicians, and businesses that have a relationship with the person they're calling -- including banks, airlines, and phone-service providers. And while the new rules prohibit the automated dialing and leaving of recorded messages on anyone's cell phone, calls by live salespeople to cell-phone customers who aren't on the do-not-call list remain legal, says Al Gidari, an attorney with Perkins Coie in Seattle, where many wireless companies are based.

Another law that is being implemented through 2005, called e911, will also inadvertently make wireless numbers more useful to telemarketers. In the past, it was hard for these companies to match up wireless subscribers' numbers with their demographics and addresses -- information that direct marketers use to decide who to call, says Lee Harward, president of ComTec Teleservices in Denver, which makes 6 million calls a year on behalf of various clients. E911, which is being implemented in stages between now and 2005, could change that.

JUST-IN-TIME COUPONS. Its purpose is to help 911 operators quickly determine the location of callers. But it could also be used for targeted marketing if carriers decide to act as middlemen between telemarketers and cell-phone customers in forwarding coupons and ads to wireless phones. That would facilitate just-in-time direct marketing. A telemarketer could beam a coupon for a can of soup to the cell phone of a person the system has spotted outside a grocery store.

Such messages would have to be passed along by the cell-service companies. For now, the carriers swear they'll never allow random direct marketing. However, Cingular, the No. 2 carrier in the U.S., would provide such a service for customers who ask for it, says Faith Seiders, Cingular's director of field operations. And consultant Mathias argues that some revenue-desperate carriers might not take such a high road. "To opt out, you'd need to write them [a letter] in Swedish," he jokes.

One way or another, wireless telemarketing could cause headaches for cell-service providers. Already, Verizon Wireless reimburses customers who complain of telemarketing calls, says a spokesperson. The next problem for the carriers could be direct marketers who send short-text messages to their subscribers. Experts say these will be one of the cheapest ways for telemarketers to reach consumers -- especially since the recipient gets charged for a text message. In Western Europe, an average cell-phone subscriber already receives one text direct-marketing message a month, says David Ferris, who runs Ferris Research in San Francisco.

For now, consumers' primary defense against wireless telemarketing will be the restraint of direct marketers. "The level of annoyance and antagonism [for wireless customers] would be extremely high, and our members realize that it's really not a good marketing tool," says the DMA's Conway. How many telemarketers agree, however, is an open question. By Olga Kharif in Portland, Ore.


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