PRIVACY IN ELECTRONIC COMMUNICATIONS

THURSDAY, MARCH 26, 1998

HOUSE OF REPRESENTATIVES,
SUBCOMMITTEE ON COURTS AND

INTELLECTUAL PROPERTY,
COMMITTEE ON THE JUDICIARY,
Washington, DC.

The subcommittee convened at 10 a.m. in Room 2237 of the Rayburn House Office Building, the Honorable Howard Coble, chairman of the subcommittee, presiding.

Present. Representatives Howard Coble, [chairman], Barney Frank, F. James Sensenbrenner, Jr., William D. Delahunt, James E. Rogan, Bob Goodlatte, and Edward A. Pease.

Also present. Mitch Glazier, Chief Counsel; Debbie Laman, Counsel; Robert Raben, Minority Counsel; and Veronica Eligan, Staff Assistant.

OPENING STATEMENT OF CHAIRMAN COBLE

Mr. COBLE. Good morning, ladies and gentlemen, and welcome to our subcommittee hearing. The subcommittee will conduct an oversight hearing on privacy in electronic communications. This hearing was suggested by the Ranking Member of this subcommittee, Mr. Frank of Massachusetts, and I am pleased to begin exploring this very important and very delicate issue.

In the technologically advanced world in which we live privacy in electronic communications is of vital importance to individuals and businesses. The ability to intercept, descramble and eavesdrop on private electronic communication over the Internet and cellular and digital communications places the privacy of individuals and businesses in jeopardy. That in turn deteriorates the incentive for individuals and businesses to engage in electronic commerce, and as a result stifles the growth of American business. It also places at risk the fundamental right of individuals to keep personal information private.

I look forward to the informative and hopefully illuminating educational hearing today.

This is an area, folks, and I'm just thinking aloud now, where it's not unreasonable for citizens to want some sort of assurance of privacy when they disclose certain private information on the Internet, and some sort of assurance that the public at large won't be able to intercept or descramble and come into possession of that information. Descrambling on the part of third party individuals and/ or the government has indeed become a problem.

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So having said that, I am pleased to recognize the gentleman from Massachusetts, Mr. Delahunt.

Mr. DELAHUNT. Thank you, Mr. Chairman.

I don't have an opening statement, but I would associate myself with your remarks. I think this is an issue that is starting to emerge in the public consciousness, and I expect that this will be the first of a number of oversight/educational hearings that we will conduct on this particular issue.

I would ask the witnesses, and this is rather an informal hearing, to describe, if they can, those laws that are currently invoked with respect to the protection of privacy as they apply to digital, cellular and communications over the Internet. That I think would be a good start to give the members of this subcommittee a sense of what the current status is of the laws of privacy in terms of these kinds of communications.

Thank you, Mr. Chairman.

Mr. COBLE. I thank the gentleman.

Mr. Rogan of California, do you have an opening statement?
Mr. ROGAN. Mr. Chairman, thank you.

I waive an opening statement.

Mr. COBLE. I see Mr. Frank has joined us, and I'll wait until he

Mr. FRANK. Go ahead.

Mr. COBLE. All right. Mr. Frank can speak to us later.

Our first panel, Ambassador David Aaron has been the United States permanent representative to the Organization of Economic Cooperation and Development, OECD, since September, 1993. In addition to his responsibilities as Ambassador to the OECD, Under Secretary Aaron has been designated Special Envoy for Cryptography. His responsibility is to promote growth in international electronic commerce and robust, secure global communications in a manner that protects the public safety and the United States national security.

Next we will hear from Mr. David Medine, Associate Director for Credit Practices of the Bureau of Consumer Protection of the Federal Trade Commission. Mr. Medine is responsible for enforcing numerous Federal credit_statutes, including the Equal Credit Opportunity Act, Truth in Lending Act, Fair Debt Collection Practices Act and Fair Credit Reporting Act, as well as the Federal Trade Commission Act. He has testified before Congress on numerous occasions and has worked on a number of policy issues relating to consumer protection in cyberspace.

We welcome you, Mr. Medine, and Ambassador Aaron in absentia until he gets here.

[Ambassador Aaron joins Mr. Medine at the witness table.]

Ambassador, it's good to have you with us. If you all can please confine your comments to 5 minutes. I assure you your written testimony has been and will be examined thoroughly. You will know your 5 minutes have elapsed when you see the red light illuminate. Having said that, let me recognize Mr. Frank if he has an opening statement.

Mr. FRANK. Having come late, Mr. Chairman, I will pass on that. I appreciate your convening this hearing giving us a chance to talk about this. I would say obviously this late in this session we're not

going to be doing anything legislatively now, but I think it is important that we begin this period of consideration. There may very well need to be some legislation, and this gives us a good start. So I encourage those who have an interest who may be here listening to take advantage of our being here and to follow up on this because I do believe that by the next Congress the time will be ripe for some legislation, and this is the right way to begin to go about it.

I also would note as people read about all the contention and acrimony that besets this committee that it is nice also to have an example that we can remind people that most of the work most of the time goes forward in a very straightforward, non-partisan and non-ideological way, and we may reserve the right to yell at each other next week. But I do think we should be explicit that the differences that we have where they exist in no way hinders our ability to work together in non-ideological and non-partisan ways to do important business.

Mr. COBLE. As Mr. Frank so eloquently said on the House floor yesterday, he has yet to see a pie hurled in the direction of a Judiciary Member by a fellow Judiciary Member.

Mr. FRANK. Thank you, Mr. Chairman, and just for people from my part of the country may I point out that "pah" is spelled p-ie. [Laughter.]

Mr. COBLE. And I thank the gentleman.

I said this earlier, but I want to credit Barney for this hearing because it was his idea. This is an area that needs attention directed to it. As Barney pointed out on the subcommittee, this issue has attracted widespread attention across the spectrum. Ideologically we have ultra-conservative and ultra-liberal advocates for this. So I look forward to hearing from you all.

Mr. Medine, if you will kick it off.

STATEMENT OF DAVID MEDINE, ASSOCIATE DIRECTOR FOR CREDIT PRACTICES, BUREAU OF CONSUMER PROTECTION, FEDERAL TRADE COMMISSION

Mr. MEDINE. Thank you, Mr. Chairman and members of the committee. I appreciate the opportunity to present the Federal Trade Commission's views on the important issue of privacy on the Inter

net.

The Internet is an exciting new marketplace for consumers. It offers not only unprecedented ease of access to a vast array of goods and services, but also to sources of information that will enable consumers to make better informed purchasing decisions.

The Commission recognizes the importance of the development of the Internet as a viable and safe marketplace for consumers. Yet our experience and survey results teach us that in order for the online marketplace to grow sufficient privacy protections must be in place. Surveys have shown that increasing numbers of the consumers are concerned about how their personal information is used in the electronic marketplace. According to the results of a Business Week survey published just last week, consumers who are not currently using the Internet ranked concerns about privacy of their personal information and communications as the top reason they have stayed off the Internet.