The Federal Communications Commission said yesterday it would contest an appellate court ruling that telephone carriers could sell personal information about their customers to third-party marketers or use it themselves without explicit consent.

The FCC said it would seek a rehearing on the issue, and released an order reiterating the obligation of carriers to seek explicit customer approval before using personal information about their customers.

"I believe that the First Amendment was meant to protect consumers first, not the marketing interests of the telephone company," FCC Chairman William E. Kennard said.

If the decision by the 10th U.S. Circuit Court of Appeals in Denver is upheld, telephone companies would be able to sell sensitive information to telemarketers about any customers who hadn't expressly stated they didn't want the information released, FCC officials say. The information goes beyond names, phone numbers and home addresses. For example, the FCC contends, if customers frequently call a psychiatrist or a pharmacy, carriers could sell that information to third-party marketers.

But phone companies said they would not abuse sensitive information about their customers. AT&T, for example, said it does not sell this information to third parties.

The FCC and phone carriers have locked horns over the privacy issue ever since the passage of the 1996 Telecommunications Act. The law included a provision that requires phone companies to seek approval from customers before using or selling their information for marketing purposes.

But the language of the provision has spawned a heated debate over how the firms must obtain the approval. The FCC has argued, and stated in an order issued in February 1998, that the consumer's consent has to be explicit--verbal, written or via the Internet.

The FCC said it wasn't enough for companies to send a letter to their customers informing them that their personal information can be sold to marketers unless they expressly disapprove.

The 1996 law doesn't make a distinction between the way carriers use customer information and the way outside parties that acquire it use it.

Phone companies, which contend the FCC rule violated their First Amendment rights, say they want to be able to use this information to improve customer service.