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Privacy and Videotex Systems

Two-way services bring with them the potential for abuse

by Richard M. Neustadt and M. Anne Swanson

Midway through George Orwell's 1984, the hero meets an old man and asks him how "Big Brother" got started. Things began to go wrong, the old man answered, when someone invented two-way television

Advances in telecommunications promise to bring all sorts of conveniences to our doorsteps. We'll be shopping, banking, and working from home. We'll have computercontrolled electronic mail, burglar and fire alarms, and medical alerts, among other things. But along with this array of new services and products comes a potential for abuse.

The possible threat to privacy that home video and computing services pose is beginning to worry some people. The growth of nationwide videotex systems, whether they operate over cable TV or telephone lines, presents two major causes for concern. First, companies that sell electronic information or provide transactional services such as home banking and shopping will be able to compile dossiers on their subscribers. This information could be misused. Second, the proliferation of electronic transfer of information raises new questions about wiretapping.

Data Collection and Disclosure The current debate focuses on the collection and possible misuse of subscriber records. Most companies that provide videotex services generate files on subscriber behavior as a mat149/160

ter of course. For instance, if the
system operator provides informa-
tion and charges his customers on a
per-page basis, then his computer
must keep a record of every video
page subscribers request. if the sys-
tem is used for transactions such as
shopping or banking at home, the
retailer or financial institution must
keep a record, and the cable or tele-
phone system operator may want to
keep its own record as protection
against claims of error.

Most companies that

provide videotex services generate files on subscriber behavior as a matter of course.

Of course, similar records have always been collected by banks, hospitals, insurance companies, and other institutions. But with videotex systems, more records are being collected in one place. Moreover, computer files are easier to obtain than original documents.

The concern about collection of records leads to another issue: the possible disclosure of private information on consumer behavior. System operators may want to sell this data to retailers, pollsters, direct mailers, or credit investigators. Such information is commercially valuable, as indicated by the`similar active market in magazine subscription

Bute July 1983


The action of a theater owner in Columbus, Ohio-where WarnerAinex runs its interactive Qube service-is an example of data disclosure. The owner of the theater subpoenaed lists of people who had watched "adult" movies on cable TV in order to defend himself against movies in his theater. obscenity charges for screening those

Protecting Privacy

Without a law or service contract to the contrary, company records belong to the company that collects them, not to the subscriber. The United States Supreme Court established this principle in 1976 when it held that a consumer had no constitutionally protected interest in his bank records that would enable him to challenge their release to government officials.

In the last two years, however, a movemen' has taken wing to legislate protections for those records. California, Illinois, and Wisconsin have passed privacy laws, six other states are seriously considering such measures, and the US Congress may well pass a privacy law next year. While most of these bills are aimed at cable TV, the Illinois law and several way services provided over telephone of the proposed bills also cover twofranchises issued in recent years inlines. In addition, most cable TV clude privacy rules.

V.. 8.

"The central aim of this legislation is to require the system operator to obtain the subscriber's consent before collecting information. In most cases, collection without consent is allowed only for purposes of billing, providing a service like at-home shopping, or protecting against unauthorized reception or other services.

The measures vary on specifics. The Wisconsin law goes so far as to require cable operators to offer subscribers a free on-off switch controlling the interactive service. Some of the pending bills require system operators to acquire liability insurance to cover any suits based on violation of their privacy provisions.

Many people in the videotex field feel that all this legislation is unneces sary. They argue that there has been no evidence of abuse and that system operators are hardly likely to offend their customers by invading their privacy. These companies make a strong argument that we should wait to set rules until we know more about

the market and the technology.

Legislation is beginning to look inevitable, however. And when it does pass, the biggest problem for the videotex industry will be the motley of state and local rules and the often ambiguous wording of laws. The differences from law to law would, for example, require the operator of a system serving several states to maintain separate databases and procedures for each state-a costly proposition.

Some companies providing interactive services see self-regulation as the best way to allay subscriber concerns and avoid a patchwork of conflicting rules. Two large cable firmsWarner-Amex and Cox-have issued codes of behavior regarding privacy. The National Cable Television Association and the Videotex Industry Association have formed groups to draft industry-wide guidelines. Meanwhile, there is increasing support for a uniform standard, set by Cess, to preempt state and local rui's.


In the case of interactive systems, several kinds of interception are possible. An eavesdropper-or a lawenforcement agent-could put a physical tap on a telephone line or dial into a central computer that transmits messages and keeps records. A cable subscriber could use special equipment to listen on his cable and pick up signals addressed to or transmitted by other subscribers.

Federal law provides criminal sanctions against unauthorized intercep tion of wire communications and regulates legal wiretapping by lawenforcement authorities. The law allows government agencies to wiretap, but only with a order-which the courts are to grant sparingly-or, if national security is at issue, pursuant to an order from the Attorney General.


Unfortunately, the drafters of this law-who worked on it almost 15 years ago did not anticipate advances in technology, and the law now has two large loopholes. First,

the law covers only "aural interception," so it does not seem to apply to eavesdropping on data and text transmissions, such as electronic mail. Second, the law defines "wire communications" as transmission provided by common carriers such as the telephone company-probably omitting most cable services.

Legislation pending in Congress addresses both problems. Senate Rill 66 forbids any private person or government body from intercepting ary broadband communication unless authorized to do so by the system operator, program originator, or federal law. (The provision does not specify whether law-enforcement investigators would use a regular search warrant or would have to meet the wiretapping law's strict standard to get court permission for nonaural interception.) This same proposal defines cable transmission as "wire communications" so as to include them within the law's scope.

It is too early to tell whether the privacy legislation pending in Congress will become law. If it does, it would preempt similar state regulation and would provide a unified substitute for the hodgepodge of different state and local rules. Although the federal proposal is currently part of a bill that focuses on cable systems, it is drafted broadly enough so that its provisions could be interpreted to include telephone-based services as well.

In the meantime, industry attempts at self-regulation on the privacy issue will increase. Most system operators are anxious not to scare their subscribers-it's hard enough to sell a new product without introducing fear into the equation. As a result, the Orwellian scenario may remain more fiction than fact,

About the Authors

Richard J. Neustadt is a partner in the law firm of Wiles. Johnson and Rein (1776 K St. NW, Washington, DC 20006) His researly published book The Birth of Electron Publishing nowledge industry Publication M&J touches upon privacy and interactie video services. M. Anne Swanson.. associate with Wiley. Johnson and Rein.

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The Freedom of Information and Privacy Acts do not apply to the legislative branch, but some members of Congress may find their privacy diminished because of a court decision involving an anomaly on Capitol Hill.

There is in the Capitol an attending physician to tend to the aches and pains of members and staff. This is a Congressional office, but the physician's office gets its pharmaceutical drugs from the National Naval Medical Center, part of the executive branch. The current Congressional physician is a Navy admiral.

A persistent journalist named Irwin Arieff has requested under the Freedom of Information Act the list of prescription drugs that have been supplied by the Navy to members of Congress and Supreme Court justices over a six-year period. Arieff agreed that the Navy could delete any information that would possibly reveal particular individuals for whom a drug had been prescribed. The Navy refused his request, saying that even from cumulative information it would be possible to figure out what drugs were prescribed for particular individuals or at least for particular ailments. The Court of Appeals for the District of Columbia, in a unanimous decision this summer, ruled that this "mere possibility" could not prevent the disclosure of the information Arieff is seeking. The court agreed with the journalist that the public has an interest in knowing the quantities of medicine dispensed without charge to Senators, Representatives, and others, as well as whether members are receiving drugs found to be uneffective by the Food and Drug Administration. Judge Antonin Scalia, a former University of Chicago law professor and Assistant Attorney General who is an expert in the Freedom of Information Act, found "justifiable concern" that some members of Congress will be victims of unfair speculation, but said he had no choice but to order the release of information unless there was an actual, not possible, invasion of privacy. Arieff v. Department of the Navy, 82-1536 (D.C. Cir. July 22, 1983). The Department of Justice Civil Division routinely planned to ask the Court of Appeals for a rehearing, but this month asked the court for a 30-day extension in submitting its petition for rehearing "because a number of members of Congress have expressed concern" about the matter. In fact, according to the attorney handling the appeal, the concern came from the counsel for the Senate, a staff member.

Michael Davidson, the counsel, told PRIVACY JOURNAL that there had been no special concern raised since the court decision but that when the litigation began, the Secretary of the Senate and the Clerk of the House, both staffers, stated their concern to the Navy and asked the Navy to protect the interests of Congressional staff and members.

Copyright © 1983 Robert Ellis Smith

ISSN 0145-7659

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[From the New York Times, Nov. 20, 1983]


(By Scott A. Boorman and Paul R. Levitt)

As 1984 approaches, a quiet revolution in computers and information gathering may be bringing us closer than we realize to George Orwell's controlled state of Oceania. The public seems preoccupied with teen-age computer "hackers" accessing sensitive computer systems. But our more enduring fears should focus on a technology that corporations, nonprofit organizations and governments are using with increasing frequency to harness seemingly innocuous data from the personnel or communications departments and adapt it in new and unexpected ways such as targeting individuals for promotion or dismissal.

One name for this new computer game is block modeling-a programming technique that evaluates how employees fit within an organization on the basis of their relations with other employees. Recent impetus has come from such diverse independent quarters as Bell Laboratories, the American Broadcasting Companies, the Wharton School, and even the Institute for Social Management in Bulgaria.

Each of these organizations has recently spent time and money to develop advanced computer methods capable of "X-raying" a complex population-several hundred middle managers, for example-to detect structural patterns of interaction and communication. And though these technologies certainly have significant benevolent uses, their premise is a recognizable extension of the "guilt by association" idea, and can therefore be abused.

Most crucially, these methods have the capacity to capitalize on the unguarded moments of ordinary people; to probe organizations for factional alignments in a low-visibility and therefore insidious way; to play to human biases-particularly among managers-to name names; and to give sometimes facile technological rationales for settling complex personnel problems.

Block-modeling does not require particularly sensitive information like tax returns medical histories. Rather, it exploits the unexpected, even uncanny synergy of large masses of "relational" data buried in organizational files. Examples of relevant data: Whom you talk with in your company; whose phone calls you do not return; whom you eat lunch with; whom you have worked with; who owes you favors; to whom do you send carbon copies of memos and letters; even whom you go bowling with. There is every expectation that far more such data bases will be routinely collected in the near future as minicomputer advances merger ever more widely with office information technology.

Only rarely will any relation between two people be very informative in isolation. But as many relations connecting many pairs of people accumulate, block modeling provides ways to distill frequently very striking and revealing patterns. Moreover, by throwing light on interlocking activities of specific people, block modeling goes a step beyond even the most refined kinds of geo-demographic data analysis such as extrapolating people's characteristics by Postal Zip Code of residence.

The output of a block-model analysis is simple to state-even deceptively so since a large amount of advanced mathematics and computing is involved. The block model of the social structure chops the social group up into "blocs." As Justice William O. Douglas once observed, a person is defined by the checks he writes. Blocs in block-modeling generalize this principle. They are discrete sets of people occupying similar positions in the relationship networks, and who are thus likely to behave similarly in ways important to the organization, and be candidates for receiving similar "treatment." Blocs can be, but don't have to be, tightly-knit groups or factions. Two people may never have heard of each other, yet can end up in the same bloc because of common patterns of relationship with third parties.

In the mid-1970's, we were part of a research team at Harvard that published the first papers on block-modeling's social applications. The response was revealing. Places like mental institutions and rehabilitation centers in Lithuania were quick to request reprints. Perhaps they saw block-modeling as a means to ferret out dissidents. Later, members of the group received inquiries from the Swiss as well as West Germans whose questions (and travel reports sent back home) were especially exhaustive.

Interest then seemed to wane until two or three years ago, when a wave of, if often unobtrusive interest started coming from American business sources.

Possible uses of blockmodeling, beyond deciding promotions and dismissals, could include the following:

Identifying sources of grassroots opposition in hostile corporate takeover situations or bankruptcy reorganizations.

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