Rosie Lombardi

Telemarketing restrictions may not come 'til 2010

By Rosie Lombardi

Decima's Telemanagement

May 2007

To borrow from the Bard: Tomorrow and tomorrow and tomorrow. The start-up of Canada's national do-not-call list (DNCL) registry to restrict telemarketing is creeping along at its petty pace.

Although Bill C-37 was introduced in 2004, industry lobbying has successfully delayed the legislation. Polling firms, political parties and charities are exempt from the DNCL. So are newspapers, on the lofty grounds that they're essential organs for political discourse in a democratic system. Existing customers are also fair game for new telemarketing pitches.

Industry groups also expressed concerns in the last round of hearings about how long numbers should remain on the DNCL, what factors define an existing customer, what information needs to be retained, and on and on.

So the rules governing the DNCL have yet to be settled. "We're expecting policy decisions based on the hearings done several months ago will be announced this May," says Richard French, vice-chairman of telecommunications at the CRTC. Once out, industry groups can again oppose the decision, says Ed Cartwright, senior director of communications at the Toronto-based Canadian Marketing Association (CMA), an industry lobby group. "We were successful four years ago." The CRTC had hoped the CMA would provide the start-up seed money for the registry, but it didn't want to take the risk.

Nor does the CRTC, which is looking for a third-party organization to operate the registry. "We hope to have the request for proposal (RFP) out in early June," says French. "We're going to set specific concerns and conditions for a series of bids. If we get compliant bids, the DNCL will probably be in place in early 2008. But if not, we're back to reconsidering the situation."

He emphasizes no federal money has been provided. "Some of the potential bidders for the role of list operator have suggested they'd like to have some contingency funding to ensure there's no shortfall in the first year, but the government has decided it doesn't wish to supply that."

No change until 2010

There are many if's, and's and but's in that 2008 target date, says Andy Woyzbun, lead analyst at the London-based Info-Tech Research Group Inc. "I'd be shocked if the DNCL registry was ready earlier than 2010." This pleasant state of limbo is good news for many industry groups, he says. "They obviously want to delay the rules as long as they can - and consumer groups don't have much clout."

He says there is so much ambiguity that enterprises that want to plan for the DNCL or have an idea of its impact should look to the US, which introduced its DNCL in 2003. Canada's DNCL is modeled on the US approach. "It will be difficult for Canada to deviate substantially from that."

But the fact that third parties will operate the list is a significant departure from the American way, where the Federal Trade Commission (FTC) administers the registry. This means a fundamental piece of information - what fees telemarketing companies will need to pay to obtain the updated DNCL every quarter - is still missing.

"They haven't talked about pricing in Canada at all," says Woyzbun, noting fees and other rules will likely be set by whoever wins the bid. "They don't want to tie the hands of bidders in the private sector."

Fees will likely be based on area codes, and will become the cost of doing business for telemarketers, says the CRTC's French. "I assume legitimate telemarketing operations will manage the extra costs and pass them on to their sponsor companies."

From an operational perspective, downloading and scrubbing off lists of phone numbers from telemarketing databases is a no-brainer, says Woyzbun. But managing databases of existing customers that telemarketers are permitted to call will be a bit trickier. Companies can legitimately call customers if they ask for information. "For example, if customers respond to a survey about a product and submit a phone number, then they have the right to call," he says. "It will be interesting to see what excuses companies use to encourage people to make queries that exclude them from the drop list." But to engage in such creative telemarketing, companies will need to track a number of factors, such as how long the company has had relationships with customers, what information they requested and so on - so they have an audit trail if complaints are received.

Operational issues

Complying with the DNCL's rules will not be a major issue from an operational perspective, says Woyzbun. Of greater significance is the business impact of the DNCL on the telemarketing sector overall once it's introduced. "It's a double whammy - the potential target market is reduced, and there's cheaper offshore labour for call centres," he says, pointing out a recent study reported 135 million numbers registered on the US' DNCL. Within just a few months of the DNCL's introduction in 2003, about 60 million people rushed to sign up.

"Many telemarketing firms closed in the initial backlash," says Robert Kaiser, president of Telemarketing Consultant.com, a Barberton, OH-based service provider and operator of call centres in both Canada and the US. "The legislation weeded out the smaller companies that can't afford the back office support and left more experienced companies that can afford the legal and other staff needed to follow the rules," he says, noting the scenario will likely be similar in Canada.

The US' regulations are still evolving. Officials are now rethinking the rules for exempted entities, which can make calls without restrictions, in the wake of a recent kerfuffle. Investigators are trying to figure out who sabotaged Democratic candidate Scott Kleeb's campaign for Congress last fall with a barrage of automated 'robocalls' that used his voice in the greeting. Almost two-thirds of voters nationwide received the recorded messages, with some receiving multiple calls in a day or even in the middle of the night. Several states are pushing legislation to impose more restrictions on prerecorded campaign calls, both bogus and legitimate ones. "The same legislation should apply to political parties, charities and non-profits as any other entity," says Kaiser. "Political parties could have made themselves part of the DNCL, but the laws don't apply to them. Many states are saying enough's enough and are creating their own laws."

These are the sorts of incidents that enrage residents, and give legitimate telemarketers pause. It's becoming increasingly difficult to walk the line between "marketing" and "annoying." The death knell may be sounding for telemarketing, says Woyzbun - and the DNCL is just one contributing factor. "People get upset with telemarketing, so companies are in any case looking for other ways to reach customers. Look at the whole Web space and the inroads Google and Yahoo are making," he says.

By the time Canada's DNCL is finally up and running, it may have become somewhat irrelevant. "The nature of ad dollars and where they go will change. I suspect in parallel with the DNCL, there will be a shift away from telemarketing, or at least random telemarketing."

Kaiser agrees random calling will soon die away - but not the telemarketing sector. "People will always have a need for communication. And electronic communication is not human, not interactive. Telemarketing is the only way to get a direct response from a prospect." It's a multi-billion dollar industry that's grown every year for the past five years, he says. Integration with Web technology is already happening, for example, in Google's click-to-call feature embedded in Web ads, which will shift telemarketing to people who are genuinely interested, he says. "The response rate for telemarketing is about 3 to 5% today, and that will go up if we weed out people who don't want to be called. And companies will save money by not making those calls. So the DNCL will help the telemarketing industry."


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