STATE LOSES FIGHT FOR CALLER PRIVACY.

Byline: Bob Egelko Associated Press 

Caller I.D., which lets telephone customers see the caller's number, can start June 1 in California without the privacy measures ordered by a state agency, a federal appeals court ruled Wednesday.

The 9th U.S. Circuit Court of Appeals said the state must follow federal rules, which require display of a caller's number to a fee-paying customer of the service unless the caller has taken steps to block the display.

A caller can prevent disclosure by pressing the star key and 67 on a touch-tone phone before an individual call, or by telling the phone company to block all displays of the number. Those rules are already in effect in the 47 states that allow Caller I.D.

The state Public Utilities Commission, when it provisionally approved Caller I.D. in 1992, imposed additional measures for the nearly 40 percent of Californians who pay for unlisted numbers. Those numbers would not be displayed on any calls unless the caller had told the phone company to allow display, the commission said.

The PUC reasoned that those customers had already shown a desire to keep their numbers private, and might not learn about the need to take further steps to protect their privacy. Some consumer groups voiced additional objections, saying Caller I.D. would be a tool for abusive telemarketers and could endanger some callers, like battered women, who wanted to conceal their location.

Pacific Bell and GTE-California, the state's two major phone companies, decided that the restrictions made the program too unprofitable to implement. Instead they urged the Federal Communications Commission to set uniform nationwide standards, an effort that succeeded in May.

The FCC said California's restrictions, adopted by no other state, were unfair to out-of-state customers and thwarted a national policy of promoting Caller I.D. The appeals court said the FCC acted within its authority in overriding the state's rules.

The federal agency rationally concluded that California's restrictions "would impede the development" of Caller I.D., said Judge Arthur Alarcon in the 3-0 ruling. He also rejected the PUC's argument that the privacy rights of customers with unlisted numbers would be violated.

"A phone number is not among the select privacy interests protected by a federal constitutional right to privacy," Alarcon said, citing a Supreme Court ruling that upheld the disclosure of phone numbers to police.

Pacific Bell spokesman Dane Pasco said the company was prepared to offer the service June 1, when the FCC rules take effect in California. He said residential customers would be charged $6.50 a month to learn their callers' numbers and business customers would pay $7.50 a month. He also said Pacific Bell would routinely block the display of numbers from facilities such as police stations and battered women's shelters.

By rejecting state rules that would have excluded 40 percent of the callers from the program, the FCC "makes the Caller I.D. product more valuable to the typical consumer" who buys it, Pasco said. He called the service "an electronic peephole, like the hole in your door that lets you look out before you decide whether to answer."

He also said Pacific Bell is planning a $35 million program to educate customers about Caller I.D. and their ability to block it. But PUC lawyer Mark Fogelman said PacBell has acknowledged that no more than half the customers are likely to understand their options.

"Millions of California citizens who are paying for unlisted numbers will have those numbers go out without their knowledge and consent if they don't get educated," Fogelman said. "Since full education is impossible, as everybody concedes, this court's decision, like the FCC's decision, will leave millions of people who think they have a private telephone number in a precarious position."

John P. Stern, the FCC's lawyer, said the federal agency considered the interests of all users of the telephone system.