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Is it time to cut the cords on directory assistance?
By Bruce Mohl
Globe Staff
Sunday, January 22, 2006

Is it time to deregulate directory assistance?

The idea may be heresy here in Massachusetts, where state lawmakers have granted residential customers 10 free directory assistance calls a month.  But with the price of directory assistance rising to unheard-of levels and regulation stifling innovation, maybe it's time to try something different.

Western European countries began deregulating directory assistance in the late 1990s, requiring consumers to select a provider rather than ceding the business to the customer's phone company.

Results have varied from country to country, but consumers overall have a broader range of choices.  Kathleen A. Pierz, managing partner of the Pierz Group, a directory assistance consulting firm in Clarkson, Mich., said some European companies trumpet low prices, while others offer concierge-style operators willing to track down a specific type of restaurant and even provide directions on how to get there.

Some companies even cater to a specific customer demographic.  In Britain, two directory assistance firms have sprung up that cater to gays and lesbians.  The companies look up numbers, but also maintain lists of businesses that are gay friendly.

In January 2002, the Federal Communications Commission became so intrigued by the idea of competitive directory assistance that it began taking public comments on adopting a European-style system, but that's as far as it has gotten.

One reason for that is the opposition of local telephone companies, which dominate the $8 billion-a-year directory assistance business.  Phone company executives say the price of directory assistance has risen in recent years to reflect actual costs but has now stabilized.  They also say consumers have plenty of options for looking up a number, many of them free.

''The FCC has a lot more pressing issues to deal with," said Thomas Moran, executive director of Verizon LiveSource Marketing, which provides directory assistance service for all of Verizon's landline business and some of its wireless business.  It also provides wholesale service to other wireless carriers.

There are alternatives to directory assistance, but most of the options have limitations.

Phone books are often out of date by the time they get delivered.  Free online directories are fairly accurate for business listings, but residential changes often lag months behind.

The price is right with a service called 1-800-Free411, but you have to dial a lot of numbers and listen to a brief advertisement in return for receiving the listing.

I tried to find the listing for a person who moved from Dorchester to Roslindale in November and had mixed success.  Verizon, Cingular Wireless, and 1-800-Free411 all had the new number, but Switchboard.com, White-pages.com, DAplusUS, and Bigbook.com didn't.

The biggest barrier faced by would-be competitors is the stranglehold that dialing 411 has on the American psyche.  Infone of Beaverton, Ore., offered as much as 15 minutes of personalized directory assistance service for just 89 cents, but it couldn't persuade enough customers to dial 888-411-1111 to make a go of it.

Long-distance companies may be headed in the same direction.  Plagued by customer defections and directory assistance that can only be reached by dialing an area code plus 555-1212, many long-distance companies appear to be deliberately pricing themselves out of the market.  MCI, which was acquired last year by Verizon, charges $3.49 for a directory assistance call.

Deregulation would put every provider on equal footing.  Customers would probably still dial 411, but they'd have to punch in a few extra numbers directing the call to the specific provider they want to use.

That may be confusing initially, but it couldn't be any more complicated than the existing system, in which choice is largely limited to the consumer's selection of a phone carrier and the cost of directory assistance is buried in the company's fine print.

Verizon, for example, charges $1.25 for directory assistance calls.  But because in-state directory assistance calls are regulated by individual states, in-state rates vary dramatically by state.  Verizon charges $1.25 for every directory assistance call in Illinois, but in Ohio it doesn't charge anything, and in Massachusetts it is required to provide the first 10 calls for free.

Cingular Wireless, for example, charges $1.50 plus the cost of air time, but provides service in English or Spanish, connects the call at no extra charge, and is starting to text message the name, address, and phone number of the person being looked up so it can be stored for future use.  Cingular operators also provide movie listings, weather information, and even turn-by-turn directions to a destination.

Comcast has a split personality when it comes to directory assistance.  Its traditional phone service charges 35 cents for directory assistance and provides 10 free in-state calls as required by Massachusetts law.

But the cable company's new Internet-based digital voice service charges 99 cents for all directory calls and provides expanded services, including horoscopes.  Comcast's service is provided by InfoNXX Inc., the largest wholesaler of directory assistance in the United States and the number one retail provider of directory assistance in the United Kingdom.

Industry officials say InfoNXX is pushing in Washington for directory assistance deregulation so it could compete for retail customers directly, but a company spokesman declined to comment, saying ''we're committed to the wholesale business in the US right now."

InfoNXX was founded by Robert Pines, the son of former Massachusetts state Senator Lois Pines.  Senator Pines was very much in favor of directory assistance regulation, opposing charges for the service back in the 1970s and leading the fight for the 10-free-calls requirement, which was approved in 1990.

Bruce Mohl can be reached at mohl@globe.com.

http://www.boston.com/business/technology/articles/2006/01/22/is_it_time_to_cut_the_cords_on_directory_assistance/?page=2