By Anna Pulley
By Erin Sherbert
By Chris Roberts
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By Rachel Swan
By Joe Eskenazi
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By Erin Sherbert
For every summertime delight, there's a downside. Flies always follow Popsicles, and if summer vacation brings joy to most students, it also lets the schoolyard bully rampage free.
In this, the summertime of our business discontent, some corporate bullies -- Enron Corp., Providian Financial Corp., and WorldCom Inc. come to mind -- are being held to account, but far too late. For years, these behemoths used their weight to get what they wanted from smaller boy and girl firms, and they didn't get punished until the damage was long done.
The bullying was made possible by a failure to reasonably regulate the business world -- a failure that continues, exacerbated, in Republican times. Example No. 1: our local phone company, Pacific Bell, and its parent company, SBC Communications.
New information released last week by the Office of Ratepayer Advocate, an ombudsman within the California Public Utilities Commission, suggests that SBC may have lied on official customer service reports it is required to submit to the government. This is the latest in a series of public charges that the company has flouted the law. The most egregious such violation involved using SBC's monopoly power over local telephone lines to ruin companies whose business plans involved delivering high-speed Internet or other telecommunications services.
"In my mind, the battle is already over, so all the [local competitors] are dead. The laws have already been disobeyed. The companies have already been put out of business, and their assets were bought with pennies on the dollar by entrenched monopolies," says Mark Anderson, a technology analyst. "A huge amount of investor money was destroyed because the government did not regulate, and did not enforce the law. I wouldn't be surprised if the total loss wasn't $300 billion to $500 billion. There was a terrific amount of economic damage done."
Given the anti-corporate-cheater rhetoric now emanating from Washington, one could be forgiven for thinking that politicians will line up to investigate, and perhaps punish, SBC for its various depredations. Instead, members of Congress have been calling for legislation that would grow the SBC bully, allowing it to enter, unfettered, the lucrative market for long-distance telephone service, a move that would add immensely to the power of the $12.5 billion company.
I've written in the past how Pac Bell has pushed and bullied and intimidated its competitors in the markets for local telephone service and high-speed Internet access, violating the 1996 federal law that was supposed to allow competitors into the local telephone market. And Pac Bell's bullying behavior apparently hasn't stopped, even though its victims are all but dead and gone now. According to testimony filed Friday by the Office of Ratepayer Advocate, Pac Bell has provided regulators with false information that hides the company's shoddy treatment of retail customers. "Once again, we find that customer service is not a priority for SBC Pacific Bell," according to Regina Birdsell, director of the Office of Ratepayer Advocate. "Were we to assign grades they would get a 'D' for their treatment of customers."
According to the testimony, Pac Bell altered records that would have shown the company frequently forces consumers to wait much longer than the currently reported average of four days for installation of a new phone line. Rather than file reports with the Public Utilities Commission revealing how long frustrated customers were waiting for phones, Pac Bell in some cases would "close" the customer's service order before a phone line was actually installed, then "open" a new service order, restarting the customer-wait clock at zero. The company would then "close" the record again once the line was installed, showing two minor-seeming delays, instead of one long one.
In response to a request for comment, a Pac Bell spokeswoman sent a statement saying that the Office of Ratepayer Advocate had its "wires crossed" and that Pac Bell is "focused on delivering the difference to our customers, and we're proud of our performance." The statement did not directly address charges that Pac Bell may have illegally falsified data submitted to regulators.
Fudging this kind of information is more important than it might seem at first glance. Just as phony accounting can convince the stock market to boost a company's share price, falsifying information required by regulators can create a misleadingly favorable impression that adds to a company's bottom line.
In the case of SBC, being able to argue that the company is improving customer service has the potential to influence regulatory decisions worth billions of dollars. Among these are decisions on the rates that Pac Bell can charge customers. Also, SBC has been fighting a PUC ruling that requires Pac Bell to cut the rate it charges competing local service providers to connect into its phone loop. State and federal regulators, meanwhile, are considering whether, and when, local carriers such as Pac Bell should be allowed to enter the lucrative long-distance market.
"Given that all of these are essentially political decisions, the court of public opinion is key," says Denise Mann, a telecommunications specialist at the Office of Ratepayer Advocate. "I think it would be pretty obvious that Pac Bell/SBC is going to do better if they look like they care about California customers."