Dialing for Dollars. Ian Ayres.  October 2003. 

The Federal Trade Commission's do-not-call registry, the most popular
consumer protection initiative in American history, is in jeopardy.
Although President Bush signed the law authorizing the list yesterday, a
federal judge last week ruled that it violates the First Amendment
because it allows households to block commercial telemarketing calls but
not calls from charities, political parties, religious groups or other
nonprofit organizations.

Instead of fighting the court's decision, Congress should seize this
opportunity to improve the program, which 50 million Americans have
already registered for. By allowing households to decide what kind of
telemarketing calls they want to receive, Congress can resolve the
constitutional difficulty, protect charities, give families better
control of their privacy and save jobs.

The Supreme Court has already made it clear that government can give
people the power to choose which solicitations they allow into their
homes. In 1970, the court upheld a statute that allowed a household to
block mail from any sender simply by notifying the local postmaster.

Such a system of selective association can easily be accommodated within
the trade commission's proposed do-not-call regulations. Under those
rules, telemarketers can still call people who have registered for
do-not-call status if they have given an express authorization to a
"specific seller." Congress could expand the concept of express
authorization to include intermediaries, like phone companies, which
would then connect the call.

This concept of "authorized intermedation" simplifies the government's
regulatory burden. The trade commission doesn't have to decide what
types of calls to connect; it can simply leave it to the marketplace to
offer the kind of filters that families really want. Families would
benefit by having greater control of a scarce resource: their privacy.

Some families would choose to block all calls. Others would agree to
accept calls from charities. And still others would take commercial
calls if the telemarketer agreed to compensate them for their time.

As things stand, telemarketers are trying to take your time without
paying you for it. That's why they call so often. Local phone companies
could set up a kind of reverse "900" number system where customers would
get paid for each minute they listen to a sales pitch in fact,
companies have already offered long-distance service based on this model
(customers can earn free minutes by, for example, listening to phone
sales pitches).

By encouraging compensated calling, Congress could save the jobs of tens
of thousands of telemarketers. It would even give telemarketers the
opportunity to make new types of calls that would be prohibited under
the proposed rules. So long as the sender meets the household's
prerequisites, the intermediary should be authorized to connect, say,
prerecorded calls or faxes.

Finally, allowing families to choose their telemarketers could also
serve the public interest. The current hang-up mentality has wreaked
havoc on polling organizations, which now average response rates as low
as 15 percent or 20 percent. Under this system, perhaps the response
ratio will improve, and we will have more reliable information about
public opinion.

With compensated calling, the telemarketing industry will enable its
reputable members to continue marketing. For Congress, such a system
offers a way out of a constitutional dilemma. Instead of crippling the
industry, Congress should embrace a regulation that will rationalize and
redeem it.

Ian Ayres, professor at Yale Law Schol, is co-author of "Why Not? How
to Use Everyday Ingenuity to Solve Problems Big and Small."

This article appeared in the New York Times on September 30, 2003.