Move Under Way to Curb Abuse of Popular Dial-It Service

Ed O’Geese, a San Francisco window-washer, was in for a shock when he opened his phone bill last January. The bill included 100 pages of “vendor charges” listing 1,977 calls at a total cost of $1,125.

Investigation revealed that O’Geese’s 10-year-old grandson had spent a good part of his Christmas holiday trying to win a prize by correctly answering a trivia quiz offered by a dial-it service. The youngster had called and re-called the “976” number and punched in his responses to the questions on his grandfather’s push-button telephone.

O’Geese was not alone in suffering from a swollen phone bill. “Dial-a-Santa” programs advertised on children’s television programs last December resulted in hundreds of complaints by outraged parents to Pacific Bell and the state Public Utilities Commission and produced a $50-million class-action lawsuit against Pacific Bell on behalf of 100,000 California children.

Even more heated was the reaction of these parents whose offspring had inflated family bills by dialing one purveyor of pornography at $2 a call:

- A California woman who was evicted by her roommate after her 17-year-old ran up $1,700 in “dial-a-porn” calls on the roommate’s phone.

- A high school student, who ran up $1,850 in similar calls, which his parents required him to pay out of his college savings.

- A low-income woman, whose wheelchair-bound 9-year-old ran up a bill of $440 between last July 5 and Aug. 5. (“He’s at home and bored,” she said of her son’s calling.)

While purveyors of telephone programming are providing a potentially vast source of easily tapped information as well as a welcome source of revenue to local phone companies that lease out their lines, the content and the cost of the programs--ranging from about 50 cents to $2 per call plus any toll charges--have created headaches for consumers and phone companies alike.

The California Public Utilities Commission is conducting an inquiry into what it calls the “information-access services” or “976” phenomenon, referring to the typical prefix on a dial-it program.

“The commission recognizes that this new source of revenue helps to offset rising rates for basic telephone service,” it said in announcing the inquiry. But, the commission continued, the new service “is plagued by numerous serious problems”--among them, it said, a public unaccustomed to paying vendor charges, misleading ads and the possible exploitation of children, questionable program content, phone disconnections for failure to pay vendor charges and customers’ difficulty in obtaining vendors’ names and addresses from the local telephone company.

So far, the PUC, which cannot directly regulate the vendors, has ordered Pacific Bell to stop disconnecting service for non-payment of vendor charges and to make the names and addresses of vendors available, which the company had been protecting as “confidential.”

Hearings on the “976” issue were held in San Francisco last month and move to Los Angeles this Tuesday through Friday; the commission is expected to act on its findings before the end of the year. At the same time, Pacific Bell has said that it plans to make blocking devices available to customers for a nominal one-time charge (reportedly about $5) to prevent calls to 976-prefix numbers.

Several Hearings

Meanwhile, the Federal Communications Commission, the Federal Trade Commission and a congressional subcommittee are conducting their own hearings. The FCC in July, 1984, tried to limit adult-oriented programming to hours when young children are least likely to be unsupervised or awake, between 6 p.m. and 5 a.m., but a federal appeals court in New York overturned that as an infringement of free speech.

There are now more than 6,500 telephone-accessed information-entertainment programs available around the nation, part of the nation’s fast-growing “dial-it” information industry--an outgrowth of the old Bell System’s time-and-temperature service. Callers can dial up jokes, children’s stories, advice on how to quit smoking, soap-opera updates, suggestive romances, clinical sex information and outright pornography. A push-button telephone can be transformed into a tiny computer terminal, enabling consumers to call up such specific information as a personalized horoscope or a stock quote, or to answer trivia questions. The potential exists to tap into databases of all kinds.

In Chicago, callers can “Dial-a-Trance” for a five-minute hypnosis session that mainly guides the caller through some deep breathing. Atlantans can get a listing of current mortgage rates offered by local lending institutions. In Miami, displaced New Yorkers longing for a little verbal abuse can “Dial-an-Insult,” delivered in a familiar accent muttering something like: “You’re so crooked that, when you die, they’ll have to screw you into the ground.”

Soothing Message

Up-tight Los Angeles urbanites can--for a 55-cent vendor charge plus any applicable tolls--obtain a more soothing message by dialing 976-CALM, one of several new 976-audiotex programs offered by Candle Corp., a computer software firm. A sample:

“ You are sitting in a large white chair by an open window overlooking the most beautiful garden you have ever seen. (Sound of rain.) Outside, a gentle rain is falling, making the flowers glisten like gems. A gentle breeze rustles the trees, and yet it is very still. You are happier than you ever remember. As you begin to return to the real world, you pause for one last look. You know you can return to your garden whenever you please. (Bird song.) It is your place, and your place alone: soft and safe and still. “

As such programs proliferate, however, so have complaints. And so have calls for tougher standards in the burgeoning industry.

Phone companies have taken some steps on their own. Pacific Bell--caught in the middle as carrier of the calls to “976” vendors--sued one “dial-a-porn” company, New York-based Carlin Communications. The suit, filed in federal court in Los Angeles, alleges that Carlin purveys obscene messages over the lines it leases from Pacific--a practice that Carlin defends as a constitutionally protected exercise of free expression.

In a similar case, Carlin won a judgment in Phoenix last month against Mountain Bell, which had pulled the plug on its dial-it offering. The service there remains disconnected, however, pending an appeal by the phone company. In the Northeast, meanwhile, Bell of Pennsylvania has submitted its vendors’ scripts to a state court to determine whether any of them violate an obscenity statute.

Seeks New Standards

Public-interest attorney Robert Gnaizda, who filed what is called the “Dial-a-Santa” lawsuit against Pacific Bell, has proposed a set of advertising standards and regulatory approaches that he believes could help make the field self-policing. Gnaizda urged the PUC either to order Pacific to suspend all “976” service until it can develop a means of protecting children from pornography and parents from unwanted charges, or to suspend Pacific’s right to collect charges from vendors.

“We believe that that free-market approach will, almost instantaneously, force the vendors to form an association to impose standards in ads for children,” he said.

As for advertising standards, Gnaizda’s law firm, San Francisco-based Public Advocates, and Pacific Bell are trying to find a mutually agreeable means of curbing abusive “976” practices. For example, “976” commercials might be banned on children’s programs, and other TV ads might be required to carry both a voice-over and print message warning of program costs, plus an admonition to children watching to consult their parents before making a call.

Pacific also wants to give any first-time “976” customer who claims ignorance of the cost a one-time credit--paid by the vendor. Pacific cannot establish standards or even set charges for a blocking device without PUC approval.

Warned of Cost

Maryland’s Public Service Commission took a different regulatory approach earlier this year when Chesapeake & Potomac Telephone began offering “976” service in Baltimore and Washington. It required vendors, during the first 90 days of service, to preface their programs with a free 10-second message warning callers of the cost of the service that they had dialed. “It suppressed calls initially, and it did overcome the billing-complaint problem.” said Brian Baum, “976” manager for Bell Atlantic, Chesapeake & Potomac’s parent.

San Francisco-based Megaphone Co., which claims to be the industry leader with 300 programs operating in a dozen markets, tried to anticipate regulators’ concerns in its marketing, according to general partners Kevin Monaghan and John Bremner.

“We’re in the phone book, we have our name on everything we do,” Monaghan said. “That’s been our policy from the beginning. I don’t see how you could see one of our commercials and not know the cost.”

Megaphone’s published standards require that all print ads contain the company logo, display the price “prominently” and include, in markets where applicable, the warning that “normal toll charges apply.” TV ads also must prominently display price, both visually at least three times within a 30-second spot, and at least once on the sound track, the partners said. Radio ads are to include the price “at least once.”

In addition, the standards require Megaphone’s TV ads that are likely to be seen by youngsters to disclose program costs “in a manner understandable to children,” to contain “no exhortative language,” and to advise “parental permission prior to calling.” The company says it offers a one-time refund for a documented first-time complaint that a child made unauthorized calls.

Complaints Exaggerated

But Monaghan feels that complaints over “976” service generally have been greatly exaggerated. “Any new industry is going to have some kind of growing experience,” he said. During a period when Pacific Bell carried nearly 40 million calls over its “976” lines, he observed, the PUC received fewer than 1,500 complaints from the public.

“Any industry that has a complaint-to-sales ratio like that is doing very well,” Monaghan said. “There’s a disproportionate hue and cry relative to the number of complaints. Kids do misbehave in other areas--leaving water running, leaving the lights on.”

In any case, vendors and the local telephone companies agree that “information access service” will become increasingly commonplace and much more sophisticated in the future. Megaphone in late July launched a subsidiary, 976-Telelease, to “resell” leased “976” lines to would-be vendors for as little as $2,500 to establish service, plus a $1,400 monthly service charge. (Pacific Bell charges a $5,000 application fee per 976-prefix program, $1,000 to start service, plus $100 for each of the 24 lines it requires as a minimum for each dial-it program. Vendors also pay a monthly service charge of $20 per line.)

Megaphone sees plenty of growth ahead, said partner Bremner. He noted that some major markets--including Dallas, Houston, St. Louis, Boston, Detroit, Chicago, Cleveland and Cincinnati--remain without “976” service.

“We see it as a continuing growth industry,” he said. “The technology is going to be creating a whole bunch of new possible applications. There’s a never-ending supply of potential things. That’s the key to our leasing business: We think there are a lot of people out there who have good ideas but maybe not all the cash they need to get started.”

Just the Beginning

At Los Angeles-based Candle Corp., its new CandleSpace “976” programming, which includes the 976-CALM program, “is just the beginning,” according to Chief Executive Aubrey Chernick. “We’re looking ahead to many areas where consumers demand more effective communication of usable information that can add real value to daily living.”

“The key thing here is interactivity ,” said Bill Dunkel, who supervises information services for Pacific Bell. “The future of this product lies in interactivity--the ability to use your TouchTone phone as, basically, an input terminal giving you the capability of obtaining a verbal response to a question.”

The telephone can thus become, through the “976” technology, a ubiquitous personal computer terminal linked to a wide range of data bases far beyond what is offered today. But for now there remains a shadow over a potentially rosy future, Dunkel acknowledged. That prospect leaves him philosophical, however.

“We’re on the frontier of the information age with this service. As a result, life there is sometimes fairly wild and woolly.”