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Analysis

Long-Distance Companies
Must Disclose Rates

July 8, 2001
New rules going into effect August 1 require long-distance companies to inform customers about rate changes. Only problem is, the rules aren't very specific about how that notification has to be made. Most companies will probably just post the changes on a back page of their Web site.

The way it's worked for most of the last 100 years or so is that long-distance companies have filed tariffs -- lengthy, legalistic documents -- with the Federal Communications Commission whenever they wanted to change their rates. While in theory the tariffs were public information, only the most determined consumer would be able to understand the bureaucratic language used in a tariff if they ever managed to get their hands on one.

In theory, the FCC has had the authority to review the tariffs but it hasn't done so for years, on the theory that there are so many long-distance carriers that competitive pressures make such reviews unnecessary. In other words, it has let companies charge whatever they wanted and to change existing rates without bothering to tell anyone.

As long as the tariffs were filed and the FCC didn't object, they were the law of the land and consumers could not contest any charges that were properly levied under the terms of the tariff. In other words, they couldn't take the long-distance companies to court.

Under the new rules, the FCC is out of the picture and the state public utility commissions will have the authority to review the companies' rates and service plans. Additionally, now that tariffs are being thrown onto the scrap heap of history, state contract rules will apply to the relationship between the companies and their customers. In theory, this would open the companies to lawsuits by disgruntled consumers.

The new regulations leave it up to the companies to decide how to disclose changes in their rates. Most are mailing out notices this month that describe their plans -- and also contain a few zingers.

The notices generally take the form of revised service agreements. In small type the notices specify that the customer accepts the terms of the agreement by continuing to use the service.

Most companies are also taking this opportunity to slip in a provision taking care of that pesky right to sue. The new service agreements specify that all disputes will be submitted to mediation rather than being argued in the courts. In other words, consumers still won't be able to take the companies to court. And since the companies generally give themselves the right to appoint the mediator, the outcome of the mediation will seldom be in doubt.

Here's how the four largest companies say they'll handle the matter:

• Fading giant AT&T says it will mail notices about rate changes with customers' bills and maintain a toll-free number containing all the latest rate information.
• MCI WorldCom is sending subscribers a 31-page booklet that, among other things, promises it will tell customers about rate changes 15 days in advance. The details of just how this will work are in the booklet, it says. Customers are advised to read this little gem carefully.
• Sprint These prairie dogs have sent postcards to subscirbers giving them the Web site where rate information will be available long about Aug. 1.
• Qwest The remains of USWest, Qwest says it will post rate changes 15 days in advance on its Web site and make them available toll-free at (866) 467-5635.

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