Thursday, December 16, 2004
When it comes to conjuring the darkest strains of consumer venom, when it comes to incurring rage so deep and bloody it makes mature adults spit with anger like petulant children, the worst offender, leading the state of California, according to the Better Business Bureau, is a bank.
It is not necessary to name the bank here since this bank or other banks have nothing to do with this story, but suffice to say that this certain bank has angered its customers with its trickery and skullduggery. It lures fellow Californians into what at first seems like a relationship of trust, trust with money on top. A relationship that benefits both: You no longer have to keep your cash in the mattress and they get to pay off their fancy building. Maybe one day you get a mortgage and in exchange the bank gets your soul. It’s something mutual.
The sneakiness starts when customers become intrigued with promises of zero percent annual financing. According to the Better Business Bureau (BBB), it’s all well and good until the innocent customer gets jammed in the gut with a 29.9 percent interest bayonet that the bank has hidden in one of those multi-page documents with microscopic words that no one but the Rain Man ever bothers to read.
These customer ambushes, along with mysterious, hulking and seemingly arbitrary fees, the BBB says, have earned this bank a hefty and consistent slathering of bile.
Coming in a strong second to the bad bank is a company perhaps more insidious, simply because with banking one has choices. You don’t like the bank that acts like a loan shark, you can always go down the street to one that hands out toasters.
But when it comes to running a telephone wire from the utility pole down to your house, you do not have the toaster option.
No, according to Pat Wallace, the president of the Better Business Bureau chapter in Oakland, which handles telecommunications complaints for the whole state. Wallace says, the second-worst company in the state is one that customers are stuck with: the telephone company SBC.
Wallace says the SBC doesn’t act like a business that is attentive to the customer for fear of losing the customer, because SBC doesn’t have to.
According to his records, SBC has received twice the number of complaints per year, every year, since Pacific Bell was re-named by the San Antonio-based SBC—formerly Southwestern Bell—in 2002. (SBC bought Pac Bell in 1997.)
Pac Bell was a member of the Better Business Bureau. When people had a problem with service, the BBB was informed right away. After SBC took over, Wallace followed up and asked if SBC would like to see the gripes that were bound to arrive at his office. No dice.
“They never called and said, ‘We’d like our complaints forwarded to San Antonio,’” he says.
Then SBC, which had scooped up millions and millions of telephone customers from San Diego to Yreka, discontinued its membership with the California Better Business Bureau.
“When they did that, “ Wallace says, “I took a good look at
- - - NOT A BETTER BUSINESS
Wallace did what anyone in his position would do. He called a friend.
He called over to his friend at the California Public Utilities Commission, the state agency tasked with keeping tabs on the telephone company and the power company, the natural gas, water and transportation companies, in addition to household goods movers and rail safety.
Wallace’s friend at the PUC told him: “The problem is we have 5,000 complaints [against SBC] here and we don’t have the staff to handle them.”
Wallace was on to something. The PUC numbers made his look like small potatoes.
In 2002, Wallace says, the Better Business Bureau got 136 complaints about the phone company. The next year it was 264, and this year, SBC hassles have already stirred 491 people to bitch to Wallace’s organization.
But 5,000 people calling the PUC? Most likely they’d called the phone company first to try get a problem fixed, were frustrated by that effort, then went to the PUC. And then some of them called the Better Business Bureau.
“So what I said to myself is, we have a monopoly, and SBC is doing nothing to fix these problems,” Wallace says. “People are having trouble even getting into SBC. So, they get frustrated and come to us.”
Wallace says the main complaint has to do with customer service. The second most common problem has to do with mysterious fees. But questions about strange fees can lead right back to complaints about customer service.
“They say to the clerk, ‘What’s this on my bill?’ and the clerks say, ‘We don’t know,’” he says.
When this sort of thing happens, often after hours of waiting and talking to robots and navigating the telephone mazes, the customer is ready to break his or her phone into tiny pieces. The cruelty, of course, is that the phone company owns the telephone lines, leaving the customer forced to take the pain.
“SBC, as far as I’m concerned, needs to clean up its act and make themselves available to its customers,” Wallace says.
John Britton is the California spokesman for SBC. He works from an office in San Francisco. He contends that it’s perfectly natural for a business as vast as the phone company to garner complaints, but the volume of complaints should be kept in context.
For example, not all the 180,000 daily calls from Californians to SBC call centers are complaints. But 180,000 people calling every day is a lot of people. Of those people, 5,220 people went on to complain about billing to the Public Utilities Commission this year. That’s down from 6,257 who called the PUC last year.
“If you look, first of all, complaints against SBC are trending down,” Britton says. “You have to mention that against 15 million access lines, which is what I have [in California], it’s less than one half of one percent of customers complained to the PUC. That is a very small number, I think.”
But to Wallace, there’s something about the individual dealing with the behemoth phone company that is unfair and frustrating.
“Maybe I’m getting cynical about all this, but that’s a
huge corporation,” he says. “Where else is an ordinary guy to
go to get his phone service? The monopoly is not back again,
it’s just a different form.”
- - - MA BELL RETURNS
True. SBC Communications is a huge corporation. Based in San Antonio, it has some 166,000 employees, roughly the same number as the population of Salinas.
It is an establishment company, being one of the 30 companies—along with heavyweights like General Motors, General Electric, Exxon Mobil, Boeing, Wal-Mart and Hewlett-Packard—chosen to serve as a financial litmus in the Dow Jones Industrial Average stock index. It is very profitable, ranked within the top 50 nationally by Fortune magazine.
In an era when monopolies are thought to be verboten but are not, the scale of SBC numbs the senses. It provides phone service in 13 states: Connecticut, Wisconsin, California, Texas, Nevada, Oklahoma, Kansas, Arkansas, Missouri, Ohio, Indiana, Illinois and Michigan. According to SBC’s calculations, it’s the phone company for one-third of the United States.
Beyond the 54 million phone lines it controls, SBC is also a majority owner in Cingular Wireless, with 46 million customers in all major American metropolitan areas, which, according to Cingular, number a hundred.
In 2003, SBC raked in revenues of $41 billion. When all the bills were paid, its net income, or profit, was $8.5 billion.
According to antitrust laws, phone companies are not supposed to be so big. But over the years, SBC has acquired several small communications companies. In 1999 it took in Ameritech; in 1997 it took over Pacific Telesis Group; and in 1998 it had Southern New England Telecommunications. Pacific Bell officially became known as SBC in 2002 in an effort to create a national brand identity.
The road to SBC is really a loop.
In 1974, the Department of Justice accused the Bell System, a national but regulated telephone system, of being an illegal monopoly, and began an antitrust suit. The Bell System, under the control of AT&T, connected the entire country with copper wire. (Besides running a telephone network, Bell also had all kinds of experimental labs, in the spirit of the father of telephone, Alexander Graham Bell.)
The federal government felt the company was stifling competition and set about breaking up the massive company known as Ma Bell.
It took from 1974 until 1981 for the opposing sides—the federal government on one side and the Bell system (AT&T) on the other—to get all their ducks in a row. Finally, the antitrust battle began in earnest in 1981.
By 1984, the Bell System was broken up, and 164 local phone access companies (“Baby Bells”) were created. But as in other recent business trends—such as in media, where disparate pieces have been consolidated into bigger and bigger conglomerates—the telecommunications industry has taken competition and turned it into what Pat Wallace and others are calling monopolies.
As critics of big media do, the phone company’s critics point to the Telecommunications Act of 1996, which was supposed to foster competition but had the opposite effect.
Since that law took effect, massive media corporations, such as the much maligned television and radio giant Clear Channel, have grown and grown. In the process, public outcry has grown as well.
Last summer, the Federal Communications Commission, charged with regulating all forms of communication from television to telephone, held a series of public hearings around the country—including one in Monterey—so citizens could air their grievances. Massive companies like Clear Channel got thrashed for being too big and too powerful.
This same trend that has brought out ire against big media can be found in complaints against the telecommunications industry.
- - - VOICES FROM THE PAST
Hugh Carter Donahue has a doctorate in Communications and Policy Analysis from the Massachusetts Institute of Technology (MIT). Formerly a professor at the University of Pennsylvania, he now writes and consults on telecommunications from Philadelphia. In 2002, he wrote an article that was published in the San Antonio Current newspaper in SBC’s hometown.
Under the headline “SBC Failing its Customers” Donahue argued that SBC has been morphing into the Ma Bell monster slain in 1984.
While other Bell phone companies are adapting to competition in local telephone service by winning regulatory approval to begin selling long distance service, SBC has focused on keeping competitors out of the local phone markets it dominates. Seemingly determined to maintain the monopoly profits it has grown accustomed to, he says, SBC has been assessed more than a billion dollars in fines for such things as overcharging consumers, anti-competitivebehavior, and failure to meet service standards.
Donahue went on to catalogue the actions taken against SBC for its anti-competitive practices. He says an audit by the California Public Utilities Commission found $2 billion in unreported profits. The PUC confirms that the audit for a $349 million assessment was leveled at SBC but went unenforced. And although regulators have been pushing for SBC to make way for competitors, Donahue writes that despite claims that it needs a rate increase, SBC has been making a 31 percent return on investment.
That was two years ago, and Donahue’s opinion of the phone company has not improved.
“They’ve been very successful at setting up rules to keep competition out of the market,” he says. “They set up regulations to keep competition out at rates where they could compete.”
How can a phone company make up the rules? According to Donahue, SBC argues its case before the FCC and the Public Utilities Commission in every state.
“The paperwork on it would take over your house,” he says. “It’s a lawyer’s gravy train. We’ve gone from monopoly to market, but now a market that never matured because the phone companies never let them.”
But with the rapid advent of wireless and Internet and high-speed connections, landlines appear less ubiquitous, forcing phone companies like SBC to adapt to survive. For instance, SBC recently ventured into a $400 million Internet television venture with Microsoft.
Donahue says residential voice telephone connections are no longer profitable. That’s why customers calling to get their phones fixed get nowhere—because it’s not worth spending much money on the old technology.
“SBC both wants to own the customer and doesn’t have to do a lot to keep the customer,” Donahue says.
Keeping the customer is what Roland Rust studies. A business and marketing professor at the University of Maryland, Rust edits the Journal of Service Research. He says that a company that accumulates complaints the way SBC is doing could end up costing itself more in the long run.
“Usually the customer will not complain to the regulatory agency right away,” he says. “They’ll usually go to the company first and then go to the regulatory agency because they don’t get satisfaction with the company. If you see a lot of complaints it might mean the company’s complaint management system is not sufficient, and that usually happens when a company tries to cut costs.”
Rust compares the situation for telecommunications companies like SBC to what’s happening to the queasy tottering in the airline industry; customers get gouged to cover costs in the short term, while costs are cut down to the bone.
“They [telephone providers] are in big trouble, because their business is going away,” Rust says. “They make their money on long distance and that’s going away, because it will all go over the Internet.”
- - - TOO BIG TO BOTHER
How does this all trickle down to the consumer? Anyone who has ever set up a phone line, terminated a phone line, called to ask about a bill, or called to get something fixed, knows exactly what it feels like when the phone company has moved on to brighter things.
It’s nothing new—people have been frustrated by the phone company for a long time.
There’s the famous Lily Tomlin skit from the old TV series Laugh In, where she plays Ernestine, the ‘40s-era telephone operator. In it she speaks to an unseen caller. “Next time you complain about your phone service, why don’t you try using two Dixie cups with a string,” she says, before delivering a punch line that became a popular catch phrase: “We don’t care. We don’t have to. We’re the phone company.”
Just last week, the public radio program This American Life devoted part of its weekly show to a story about a woman who got locked into a 10-month battle with her phone company, MCI, which had overcharged her $946.36. According to the program, “She spent hours on hold, in bureaucratic nowhere.”
How does that feel?
A few local readers offered their own experiences:
There’s the New Monterey woman who tried to set up a telephone line after recently moving back to town. After getting stuck talking to robots who told her to pick a number to punch, she ended up in an endless loop. She eventually became so frustrated, she threw the phone against the wall. “I just felt like I needed a human being to talk to,” she recalled. When a repairman came out to help and he heard her story, he just shook his head.
But another problem cropped up and she ended up in what she calls a “nightmare cul-de-sac” with a robot voice repeating “I’m sorry. I’m sorry” over and over and over.
“It was just astonishing to me,” says the newly returned resident. “The upshot is I pretty much don’t call SBC anymore. I just can’t bear the thought of it. I hate giving in, but it’s self preservation.”
Then there’s the Salinas accountant who called SBC to get her DSL line set up. When she called for help from a technician, the man on the other end was nearly indecipherable. It’s not that it was a bad connection, it’s that he was in the Philippines.
“It was still English, but I had to concentrate so much. Someone in the Philippines is telling me to check a piece of hardware next to my server. I wasted so much time,” she says. “I have a passion for a lot of things and I just can’t let this one get my panties in a bunch.”
Another tale comes from a bookkeeper in Carmel. Overseeing five stores, she paid for the telephone service with one check.
“That really messed them up,” she says. “That one check was confusing to them.”
The bookkeeper tried to get it reconciled over five months, getting nowhere. Every time she called, when she got to a person, it was never the same person she had before. She kept getting notices that the account was past due.
But when the phone company gets confused, it kills the phone.
“Even after I proved payment, they cut off service,” she says. “My boss was absolutely flipping out.”
Although it was not that funny at the time, the bookkeeper calls her experience with SBC a “comedy of errors.”
Phone service isn’t the only source of complaints. Internet hook-ups through SBC have fostered Web logs with irate customers bitching to each other about the lack of service they’ve had. One such Web site, dating back to March, 2003, goes on for pages and pages, with people complaining about either SBC phone service or the high-speed Internet connections known as digital subscriber lines (DSL).
People posting entries on the site compare notes about trying to get a simple local telephone line but instead getting a whole package they can’t pick and choose from. Eventually, some folks claiming to be SBC employees weigh in. It’s not pretty.
Here’s a view from the inside: They laid off a bunch of employees over the past two years. You may recall hearing or reading something about it in the news. Anyway, they laid off about 200 techs in Kansas City. Now they are so short-handed that they have to force the remaining techs (like myself) into working 6-7 days a week. Many days we work 12- to 14-hour days. This is what has happened all over SBC, so just to warn you, if your phone goes out it may not get fixed for a while. Why? Because we just don’t care anymore. If SBC doesn’t care why should we? Don’t worry though, we’ll be sitting in our trucks somewhere drinking coffee being pissed about giving up yet another weekend off for corporate greed.
That’s one of the polite entries.
- - - 411 IS A JOKE
Trying to rectify a bill with the phone company can be a certain nightmare, but have you had any luck with directory assistance?
Sometimes it’s incredibly accurate, and the operators are helpful. Need to find a man named Soo in remote Alaska who owns a video store but you don’t know the name of the shop? A good operator can get it in two tries by ignoring the guy’s name and just looking for video stories in Bethel, Alaska. And the surrounding area.
But sometimes, calling 411 means you are wasting your time.
Here’s one example:
A reporter calls directory assistance and asks for the main post office in Washington, DC. He’s gets the number for The Washington Post, a newspaper.
Months later the reporter tries the experiment again, asking for the US Post Office headquarters in Washington, DC.
After one or two rings, a man picks up.
“Yes, is this the US Postal Service headquarters?”
“Is this post office headquarters?”
“This is the government post office. You want the main post office?”
“George! What’s the number of the main post office? They’re calling from California,” says the mailroom guy. He comes back on. “Hold on, my supervisor is checking for you.”
After a pause the mailroom guy comes back on and gives me the toll-free information number.
“Try (800) 555-1212. It’s on North Capitol Street, northwest.”
Then the supervisor comes on the line.
“This is George Howard how may I help you?”
“I’m looking for the Post Office headquarters.”
“Try (202) 523-2386,” George says.
“What office is this?”
“This is the District of Columbia government office of property management, Postal Services branch. What I gave you is the US Postal Service post office. Sorry it took so long. I was in a conference.”
“Sorry to bother you. Thanks.”
“No problem,” says George, and we part by phone.
Throw directory assistance some softballs and they can’t miss. Ask for the United Nations, you will get a UN robot that speaks English and French. Ask for The New York Times and you get The New York Times.
Call and ask for the Golden Gate Bridge office and you’ll get the bridge office, not the park office. Call and ask for the number for Georgetown University in Washington, DC and you will get George Washington University, but the folks there are across town. They’ve had the call so many times, they will humorlessly give you the number for Georgetown and hang up.
- - - THE SURVIVAL METAPHOR
Sure enough, the number of complaints filed against SBC with the California Public Utilities Commission total 54,608 dating back seven years, according to PUC documents. When asked to comment, SBC spokesman Britton was prepared—someone had forwarded a solicitation for complaints that the Weekly published in early December.
A former San Diego television reporter, Britton demanded to know why we wanted to “crucify the company.” He asked: “What led you to use words like ‘nightmare’ and ‘horror stories’?”
He also had a copy of the complaint tallies from the PUC, which the newspaper faxed to him prior to our interview. He pointed out that the numbers spike in 2000—when SBC was launching its DSL service.
This service was brand-new, and done at the urging of the state, he said, a fact confirmed by a state official. He compared SBC to the Donner party—explorers who met a grisly fate in 1846 trying to cross the Sierras. (They famously ate each other’s corpses to survive.) “They froze to death out there as pioneers,” he says. “We pioneered new technology in this state because we were asked to.”
Asked to comment on a Web site that serves as an online log of customer complaints against SBC, Britton volunteered to individually help solve the problems. But then he said: “Sometimes the customer is wrong, we think. Are we right 100 percent of the time? No. And when we’re not, we fix it. But lots of times the story the customer is telling isn’t really how it went down.”
Britton says that SBC pays attention to its customers because it doesn’t want to lose them in a very competitive environment where once-regional phone companies like Pacific Bell are now national entities like SBC.
“Millions of people are dependent on us for essential services and the overwhelming vast majority of the time this company is doing a very solid job of delivering these services,” he said. “Complaints are a byproduct of doing business. I wish I had zero complaints, but zero complaints is not going to happen.”
For Public Utilities Commissioner Susan Kennedy, the competitive environment that SBC finds itself in makes for a dicey situation. When it comes to SBC pushing DSL hook-ups she applauds them but she doesn’t want the innovation coming with a lot of mistakes.
“Yes they get a lot of complaints and they get more complaints than their sister companies,” she says. “But it’s not that large when you think about how many lines they have.”
As a commissioner, Kennedy has taken a keen interest in telecommunications issues. She looks forward to a near future where communications technology is bundled so efficiently that voice telephone service drops to the status of a freebie. For example, she calls the advent of cable companies offering full communications packages an “800-pound gorilla” that companies like SBC will have to confront. She anticipates a “colossal battle” among the media giants like TimeWarner, SBC and Comcast.
“This market is so competitive. They’re [SBC] losing local access lines hand over fist. Between cell phones and the Internet, people are going to be able to walk away from SBC. They’ve got the ability to really lose customers. So if they’ve got growing pains, they’ve got to get over them fast.”
Kennedy, who is the former director of the state Democratic Party, and served as Cabinet Secretary for Gov. Gray Davis following a stint as communications director for Sen. Dianne Feinstein, says that if moving to a future where it must compete with wireless and cable technology means a bumpy transition for SBC, Kennedy is all for it. She notes that during the 2004 Presidential campaign, it was found that some six to eight percent of the voting public were absent from public records because they are wireless.
“The world is really changing under our feet,” Kennedy says via cell phone in transit from a meeting in Sacramento. “And it’s a wonderful thing.”
Clearly the world is changing. As wireless technology takes
over, landlines may soon become a thing of the past, as
Kennedy and others contend. Until then, you can expect that
when the line goes dead after a storm, that they’ll send a
repair van some time between, oh, 8 in the morning and 8 at
night, when you are supposed to be at work. And you have to
know that you’re not the only one whose phone went out, and
it’s not the phone company’s fault that they have millions of
bill-paying customers whose phones can go out. And if you
expect SBC to spend some of its eight-plus billions in profit
to fix that situation—forget it.