Do-not-call Downside
Industry Leaders Predict Loss of Jobs, Competitive Prices
by Kevin G. DeMarrais, Staff Writer
Bergen Record - Wednesday, July 9, 2003
The trickle-down effect will not be pretty.
Higher long-distance rates. Fewer credit card deals. Lower newspaper circulation. More layoffs.
That is the other side, the downside, of the euphoria over the national do-not-call
registry, the head of one of the nation's largest telemarketing companies says. Even
as millions of consumers embrace the new rules, Arthur Conway is predicting dire consequences.
"There is going to be a trickle-down effect, and it is going to be felt most by small
businesses," said Conway, the chief executive of DialAmerica Marketing Inc. in Mahwah, a
$200 million-plus, 8,000-employee telemarketer.
The timing is especially bad considering the "soft" state of the nation's economy, Conway
said in an interview at his office. "Do it in a strong economy; don't do it in a weak
economy."
The full impact may not be known for a year or two, but companies of all shapes and sizes
will be hurt by the loss of what has been an efficient, cost-effective sales tool, he said.
The problem isn't just the do-not-call registry launched 12 days ago by the Federal Trade
Commission, Conway said. A voluntary do-not-call list has existed for years, administered
by a trade organization, and telemarketing has grown steadily in that time.
Of greater impact is the Federal Communications Commission's joining with the FTC, a move
that extended the list to industries beyond the FTC's jurisdiction, including airlines,
banks, and telephone companies, and expanded it to intrastate telemarketing calls.
The Telephone Consumer Protection Act of 1991 gave the FCC jurisdiction over in-state and
interstate calls, which the FTC lacks.
With the FCC on board, small businesses such as landscapers, dry cleaners, and newspapers,
who sell locally, were subject to the same regulations as national long-distance telephone
and credit card companies, he said.
Registration began June 27, but the regulations don't take effect until Oct. 1. Starting
then, telemarketers who call people on the national registry are subject to fines of up to
$11,000 per incident. Exempted are non-profit organizations, political candidates, survey
takers, and representatives of companies having "existing relationships" with the consumer.
Consumers responded quickly, and more than 21.8 million phones were registered by Tuesday.
The FTC is estimating that 60 million of the nation's 166 million residential phones will
eventually be listed, and that could mean the end of the cold-calling business as it currently
exists, Conway said. "There's not going to be anyone left to call."
The industry estimates that telemarketers attempt as many as 104 million calls per day, and
"the vast majority of people in the country want to receive calls," Louis Mastria, a spokesman
for the Direct Marketing Association, said in an interview in May. The association, based in
New York, has 4,700 telephone, catalog, and online marketing members.
Last year, in 185 million transactions, Americans bought $200 billion in goods and services
via "outbound marketing," Mastria said.
Conway, who is a member of the DMA board of directors, said aggressive telemarketing has
benefited consumers in many ways, including lower long-distance telephone rates and better
deals on credit cards.
"A lot of that is going to go away," he said. "Lack of cold-calling is going to affect competition."
If the new regulations had been in effect 10 years ago, long-distance prices and interest
rates would be much higher than now because carriers and card issuers would have more
difficulty attracting rivals' customers, he said.
Despite Conway's warnings, it's too soon to tell what impact the new rules might have,
said Bob Nersesian, a spokesman for Bedminster-based AT&T, which makes hundreds of millions
of calls annually to drum up long-distance business.
"We're going to have to wait until October, when it takes effect," Nersesian said. "We have
a number of ways of reaching customers, and always have. Telemarketing is just one part of
the marketing mix, just one part of a robust mix."
While telemarketing companies will be affected directly with reduced business and loss of
jobs, there will be ramifications several levels removed, such as when a landscaper can't
employ telemarketers to replace customers lost through attrition and is forced to lay off
his workers.
"The guy mowing your lawn, who never thought he'd be affected by telemarketing, will be told
one day, 'We're going to have to lay you off,'" Conway said.
There is also concern whether small merchants will fully understand what is required of them
under the new regulations, and they could end up getting "dragged into court" for violations.
"That's how they're going to learn," he said.
Companies will be forced to use other sales methods, including direct mail and e-mail, but
neither is as effective as telephone sales, Conway said. Even as the telemarketing rules go
into effect, regulators and legislators are looking into ways to control unsolicited e-mail,
or spam.
"If an alternate source worked, they'd be using it today," he said.
Several factors led to the restrictive nature of the do-not-call registry, Conway said.
Some of the problems his industry faces are due to technological advances, especially
"predictive dialing," allowing telemarketers to call more people at once than they have
staff to handle, Conway said.
As a result, "the number of telemarketing calls has increased dramatically," and consumers
are left with "dead-air hang ups," a major complaint.
Regulations setting up the do-not-call registry require telemarketers to abandon no more
than 3 percent of all calls placed and, in most cases, to have a live sales agent on line
within two seconds of a recipient's greeting.
Also, the new rules prohibit telemarketers from blocking caller ID information.
With those improvements, plus the existing DMA list, consumers have ways to deal with
telemarketers without a national do-not-call registry, Conway said.
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