I. INTRODUCTION AND SUMMARY

The Center for Democracy and Technology (CDT) is pleased to have this opportunity to testify on the issue of unsolicited commercial email (UCE).

CDT is a non-profit, public interest organization dedicated to developing and implementing public policies to protect and advance First Amendment freedoms, individual privacy, and democratic values on the Internet. CDT is pleased that the Senate has recognized the important implications for these issues raised by the growth and prevalence of UCE.

Over the past few years, the Internet has rapidly become the cornerstone of an immense, global, multimedia communication network for culture, science and commerce. The Internet has proven wildly beneficial not only in fomenting free speech, but in facilitating the operations of the commercial marketplace as well. The first, most popular, and widely used application on the Internet is electronic mail, or email. Across the globe, email is spanning distances and cultures by easing the exchange of knowledge, information, and resources.

Unfortunately, the very popularity and efficiency of email has created several problems. The one we address today is that of unsolicited commercial email. Because of the effortlessness with which one sender can transmit a message to hundreds, thousands, or even millions of recipients, sending unsolicited commercial inducements to vast email address lists has been an irresistible temptation to some businesses.

Unlike postal mail, which is paid for piece by piece by the sender, the full cost of unsolicited commercial email is not borne by the sender. The current system of allocating the costs of moving information, including email messages, on the Internet allows the costs of sending bulk missives to be shifted from the sender to intermediaries, such as Internet service providers (ISPs), and to the recipients. While each individual email message only requires a minimal amount of Internet resources, when multiplied by the millions, such bulk messages can easily clog data pipelines and force both ISPs and recipients to spend time and resources to deal with what are frequently unwanted messages. Additionally, UCE, which can flood an individual's home or office email accounts, is viewed by many recipients as the computer equivalent of unsolicited telemarketing pitches.

However, responding to the problems caused by UCE is not simple. Not only does this very complicated issue touch upon First Amendment and privacy concerns, it also involves regulating a decentralized and global technical infrastructure. Both the frustrations of the Internet community and the complexities of addressing UCE were aired at the Federal Trade Commission's half-day workshop on UCE held last June. At its conclusion, and at the request of then-Commissioner Varney participants agreed to undertake a collaborative effort to explore possible responses to the growing problems associated with UCE.

For the past year CDT has coordinated a diverse group of organizations and businesses to explore the problems associated with UCE and identify potential solutions. Participants in this effort include representatives from all my fellow panelists organizations this morning -- America Online, the Coalition Against Unsolicited Commercial Email, the Direct Marketing Association -- and many others. The work of the Ad-hoc Working Group on Unsolicited Commercial Email is detailed in the report to be delivered to the Federal Trade Commission in July.

While the report of the working group is not yet public, I believe that the detailed review of legislative, technical and self-regulatory approaches to this issue and the broad recommendations of the working group will provide a useful roadmap to those seeking solutions to the problems associated with UCE.

Of course, the Senate has already taken some action by passing the amendment targeted at UCE, sponsored by Senators Murkowski and Torricelli, to the Telephone Anti-Slamming Bill, S. 1618. These amendments require creators and senders of UCE to provide accurate contact and routing information as well as permitting recipients to request removal from mailing lists. The bill empowers the Federal Trade Commission, state governments, and ISPs to enforce its provisions.

CDT believes that S. 1618 is a good first step that will reduce the problems caused by UCE. We believe the bill, unlike other approaches, steers clear of many of the thorny First Amendment issues, and does not unduly burdens speakers or ISPs. However, we do believe that the current definition of commercial email is overbroad and may unconstitutionally prohibit anonymous, non-commercial speech -- clearly not the intent of its drafters.

CDT believes that S. 1618 would if enacted begin to address the problems of UCE. However, CDT believes that the impact of legislation, particularly in an environment like the Internet, must be monitored. CDT appreciates the Committee's effort to focus on this issue and encourages the Committee and Congress -- whether or not S. 1618 becomes law -- to monitor this issue. CDT and other members of the Ad-hoc Working Group individually, and perhaps as a group, will also be carefully monitoring the implementation of both state and federal laws. The Working group's report will be available soon. We look forward to working with you and thank you for your effort to address this important issue.

II. UCE IS A GROWING PROBLEM FOR THE INTERNET

The unique characteristics of the Internet offer the potential to greatly facilitate free speech and foment democratic values. As the recent Supreme Court decision Reno v. ACLU recognized, the Internet offers new opportunities to maximize individuals' ability to choose the opinions and ideas worthy of attention and adherence. However, the aspects of email that make it a boon to organizers, advocates and others seeking to spread their message and make common cause also enable individuals and corporations to nearly effortlessly send unsolicited commercial messages by the hundreds of thousands into email in-boxes across the globe.

In an ironic twist, the flood of this particular form of speech --unsolicited commercial messages -- has effectively chilled other speech in several significant ways. The unbridled use of email by commercial entities to send unsolicited messages, and pass along the cost of those messages, to end users may undermine the very First Amendment values that enable UCE. Sobering evidence is provided by Usenet news groups -- ongoing email discussions on specific topics -- where discussion once flourished, but have grown silent due to the influx of UCE and the harvesting of participants' email addresses.

The speech of some commercial entities has been chilled as well. Several companies have called CDT seeking assistance in communicating with customers who have actively requested to be contacted via email. Other businesses have refrained from using email at all because in the current environment it is viewed by the majority of email users as a bad business practice. Aware of the pervasive negative feelings toward UCE, companies are anxious to ensure that recipients of their requested messages can distinguish them from UCE.

In response to abuses of their email system, some ISPs have set terms of service agreements that go beyond limiting UCE and set rules more broadly to limit or prohibit unsolicited bulk messages regardless of their content. As a result, individuals engaged in non-commercial speech have been cut off by ISPs.

Because of its cost-shifting nature, UCE places a burden on those who transmit and receive it. For users, UCE inappropriately imposes costs in the form of connection time and server and disk storage space, not to mention the time wasted identifying and deleting unwanted messages. Increased costs for ISPs are similar. Soft costs include the expense of network bandwidth and processing email. Hard costs encompass additional staff and storage demands. Additional costs and damage results from messages with inaccurate routing and sender information. These costs are not nominal. Estimates of the volume of email have been as high as 30% of total email volume, costing ISPs and users real dollars each month.

UCE is unfairly shifting costs onto ISPs and recipients, chilling some users' speech, and undermining the viability of email itself.

III. THE RESPONSE SHOULD BE TAILORED

The cost to Internet users, Internet service providers and the burden on the network as a whole has placed the issue of UCE on the agendas of Internet users, ISPs and, most recently, policy-makers.

Informal estimates indicate that today roughly half of unsolicited commercial email messages contain fraudulent or deceptive content. Fortunately, there are already laws on the books to combat fraud, regardless of whether it is conducted through the mail, over the phone, or on the Internet. However, regulating unsolicited commercial email messages that provide accurate information is a more complex issue. On the one hand such messages are truthful speech entitled to certain First Amendment protections. On the other hand, the government does have a substantial interest in reducing the harms associated with this form of commercial speech.

Acknowledging the real costs and privacy considerations raised by UCE, we must be cautious in regulating commercial speech in this new medium. It is, of course, important to note that although commercial speech may be regulated by the government, such speech still maintains substantial First Amendment protection. In addition, the Constitution requires that we consider the potential chilling effects and increased burdens on non-commercial speech posed by any such regulation.

Care and deliberation is appropriate not solely because of the potential impact on speech, but also due to the evolving nature of email and its uses. The impact of regulation in the decentralized and global medium of the Internet is unclear. The implementation of any regulation on speech in this medium must be carefully monitored and assessed. The ultimate results must be reviewed in light of the goal. Will efforts to regulate unsolicited commercial email messages be successful and lead to increased control by users and Internet Service providers over UCE -- lowering and eliminating costs and allowing users to avoid unwanted messages? Or will it unintentionally invite more commercial actors to partake in sending UCE, encouraging what it was meant to reduce by leading to larger numbers of UCE messages and an increase drain on Internet resources? These answers and others equally important are as yet unknown.

The issue and the solutions ultimately chosen to address UCE, touch on core civil liberties concerns and have ramifications for the future of the Internet. An improper policy or technical resolution to the UCE issue could have a negative impact on online free speech and individual privacy, or have unintended consequences for the Internet. While the stakes are high, the current situation is intolerable to many. Precisely because the impact of legislation in this dynamic and evolving medium is difficult to predict, CDT is pleased that thus far Congress has chosen to tread carefully and narrowly in this area.

IV. LOOKING TOWARD POSSIBLE SOLUTIONS

At the conclusion of the Federal Trade Commission's June 1997 session on Unsolicited Commercial Email (part of a three day Workshop on Consumer Privacy), then-Commissioner Varney urged participants to undertake a collaborative effort to identify workable solutions to the problems arising from UCE. Over the past year, CDT has shepherded an open process, the Ad-hoc Working Group on Unsolicited Commercial Email -- to explore the problems associated with UCE and identify potential solutions. Participants in the FTC's workshop, joined by other interested parties, have explored the issue of UCE, reviewed proposals, and identified a range of potential solutions.

In July the group will deliver its report to the Federal Trade Commission and make it publicly available. The report documents the progress, findings and recommended first steps to address UCE of the Ad-hoc Working Group on Unsolicited Commercial Email. The goal of the group and the report is twofold: to provide a factual basis for efforts to address UCE; and, set forth initial recommended actions, established through rough consensus of the group, that should be taken to address UCE. We look forward to sharing the report with the Sub-committee and to continuing this dialogue.

As a convener and primary drafter of this report, CDT will defer a discussion of the general issues until the final report is released. However, we will put forth three guidelines which should inform the framework of any legislative response to the harms of UCE. We have found that there is a widespread consensus to:

These guidelines are broad and permit substantial flexibility in crafting legislative proposals with regard to UCE.

V. A GOOD FIRST STEP

CDT would like to commend the Senate for its leadership in addressing the problems associated with unsolicited commercial email by passing the UCE amendment to S. 1618, the Telephone Anti-Slamming Act.

The amendment requires those who send UCE to:

• identify themselves and provide accurate contact information within the body of their email message;
• provide accurate routing information; and
• stop sending email messages upon the request of a recipient.

The bill also gives several different parties the right to bring legal action against the senders of unsolicited commercial email. Those parties include:

The bill gives the FTC, the State Attorneys General and the Internet service providers the power to enforce the law's provisions. The bill also retains the states' abilities to enact additional legislation or to employ existing consumer protection laws to address unsolicited commercial email.

It is important that the scope of any attempt to reduce unwanted or abusive uses of email be carefully limited in order to prevent unconstitutional and unnecessary (for at this time UCE is the source of problems) limitations on speech. Indeed, any overly broad legislation might ultimately destroy email's usefulness in a misguided attempt to save it.

S. 1618 attempts to avoid this conundrum by specifically limiting the scope of the bill to electronic mail that contains advertisements or solicitations. It also provides exceptions for email sent at the request of the recipient or for email sent within the context of an ongoing business relationship.

CDT believes therefore, that the basic thrust and scope of S. 1618 moves in the right direction. However, we are concerned that the specific definition used is overly broad, and could unconstitutionally restrict email messages that contain a solicitation but who's primary purpose is not commercial. (For example many non-profits and individuals have solicitations or pitches in their email signature. The signature file may request donations, advertise services, or hawk a product -- but the core message of the email may be clearly non-commercial.) One of the central impositions of this bill is that it requires those who create and send UCE to provide accurate contact information. If this requirement were applied to messages whose primary purpose is political or personal, but contain a solicitation or advertisement, it would be in conflict with the general freedom to publish anonymously recently affirmed by the Supreme Court. (McIntyre v. Ohio Elections Comm'n)

It is critical that legislation aimed at UCE steer clear of regulating other forms of speech. Unlike commercial speech which can be subjected to disclosure requirements like those in S. 1618 -- contact information -- under existing legal precedents, such requirements on speakers of literary and political messages (and potentially others) have been rejected by the Supreme Court. (See, Talley; McIntyre)

We have a long tradition of both publishing anonymously and defending the right to do so. In the context of politics, political movements, and organizing, anonymity has played a critically important role enabling unpopular views and controversial opinions to be espoused and judged on their merits without placing the speaker in harms way.

To ameliorate our concerns, we suggest that the statute incorporate the legal definition of commercial speech as articulated through Supreme Court cases:

CDT also notes that S. 1618 must be narrowly interpreted in order to conform with recent Supreme Court cases regarding commercial speech. Certainly the State is asserting a substantial interest by protecting the free speech enhancing value of the Internet. However, it is important that the means chosen are in proportion to that interest, and are carefully drafted to achieve their goal.

One of the most important qualities of the Internet is that the barriers to entry are extremely low. As a means of communicating cheaply to a broad audience, the Internet, specifically email, is unsurpassed in economic efficiency. The Supreme Court recognized this fact implicitly in Reno v. ACLU, in which the Court was very concerned with the burdens imposed on speakers by the Communications Decency Act.

CDT believes that S. 1618 is a first step towards addressing the problems associated with UCE. The requirements for the creators and senders of UCE are limited to those that will directly aide Internet Service Providers and users in filtering out unwanted messages, limiting the damage caused by bounced messages, and allowing users to prohibit future advertisements and solicitations from annoying them. No burden is placed on the ISPs, nor do individual speakers bear excessive costs. Most importantly, with our suggested change to the definition, we believe that S. 1618 will narrowly focus on UCE and steer clear of regulating other forms of speech.

VI. WHAT SHOULD CONGRESS DO NEXT?

While it is unclear whether S. 1618 will on its own prove to be the silver bullet, we believe that if enacted into law it would reduce the number of unsolicited commercial email messages. Some anti-UCE activists believe that the only way to combat UCE is for Congress to enact a ban. However, in light of recent Supreme Court decisions on commercial speech, it is questionable whether such a ban would withstand a legal challenge.

More importantly, CDT believes that the approach taken in S. 1618 will reduce UCE without banning any form of speech. If the history of UCE and its practitioners behavior tells us anything, it tells us that senders choose to conceal their identity and to frustrate the ability of users to quickly, easily and automatically respond. Why? Because if recipients can respond history tells us that they do so quickly, forcefully, and with a fairly resounding "NO more UCE."

The most telling example of the potential power of the tailored regulations contained in S. 1618 come from the infamous Internet tale of Canter & Siegel. Martha Siegel and Laurence Canter in one journalists words, "have the distinction of being the most detested husband-and-wife team in the history of the Internet. And we are talking global hatred...true internationalism." ("A Net.conspiracy so immense: Chatting with Martha Siegel of the Internet's Infamous Canter & Siegel," K.K. Campbell) Canter & Siegel, immigration attorneys, sent an unsolicited message advertising a service to nearly 6,000 Usenet newsgroups. Unlike many of today's "spammers" Canter & Siegel's return email address appeared on the message. Within hours their Internet service provider was bombarded with angry messages. According to reports the ISP's system crashed numerous times and Canter & Siegel's account was canceled. As known "spammers" Canter & Siegel, like Sanford Wallace after them, discovered that its difficult to find an Internet Service Provider. When Netcom found that Canter & Siegel had opened an account with them they quickly canceled it stating that, "Our position is that NETCOM can be compared to a public restaurant where a customer may be refused service if the customer is not wearing shoes. for the health of the other customers and the good of the restaurant, that customer may be turned away. NETCOM believes that being a responsible provider entails refusing service to customers who would endanger the health of the community."

The story of Canter & Siegel, the recent alleged conversion of Sanford Wallace, other anecdotal stories of uninformed "spammers" experiences with angry recipients, and the high number of "spammers" who disguise their identity and the message origin, suggests that a little light on the subject -- and the sender -- may go a long way toward reducing UCE.

CDT believes that if UCE is identified with a sender and can be easily responded to that a likely impact will be a reduction in UCE as senders are forced to bear the costs of receiving responses, removing individuals from their lists, and handling the angry messages of millions of disgruntled email users whose efforts to be heard have been frustrated for years.

Wisely, S. 1618 does not preclude states from passing additional legislation to reduce UCE. Many states have already begun to take such action. A wide variety of pending legislation at the state level indicates that a diversity of approaches are emerging to respond to this problem. Congress should continue to allow states to experiment with alternative legislative schemes if they feel it is necessary and Congress should monitor the effectiveness of such action.

On example of state action is legislation passed by the state of Washington in March, which recently went into effect. The language of the Washington legislation is very similar to that of S. 1618. Of course, like S. 1618 such legislation will not directly eliminate UCE. However, as Washington State Attorney General Christine Gregoire said, "This is not a perfect law, but it will start a process for changing the behavior of those who use the Internet to market their products and services."

It is the same here. While it may not solve all of the problems associated with UCE, we believe S. 1618 is a first step worth taking and that as Justice Brandeis said, "sunlight is often the best disinfectant."

For these reasons CDT suggests that Congress continue to monitor this issue. We will provide you with the report of the Ad-hoc Working Group as soon as possible. CDT looks forward to working with the Senate and House as they move forward on this issue. Thank you for the opportunity to share our views with the Sub-committee.