Hang Up on High Phone Bill
Don’t assume that phone calls from airports and other locations, or even from hotel rooms, are being handled by major phone companies.
The number of independent telephone companies offering long distance, interstate service from hotels and airports is growing, and the Federal Communications Commission is investigating complaints by consumers about excessive rates.
“People are discovering amounts on their bills for operator-assisted and credit-card calls from companies they never heard of,” said Gregory Vogt, enforcement chief for the FCC’s common-carrier bureau.
The FCC doesn’t regulate such firms on the same basis as AT&T; and other major phone companies, Vogt said. “As non-dominant companies, they don’t have to file their rates with us and they don’t need our authority to operate. But they are under an obligation to charge reasonable rates.” Vogt said that the FCC has never been called upon to determine what are reasonable rates.
Separate Contracts
These companies also are referred to as re-sellers because they subscribe to long distance lines from other phone companies and then make separate contracts with hotels and other places to offer operator services.
Calls are then automatically connected to an alternative operative service (AOS), which charges its own rates. These calls could be collect, credit card, third party and even those made on a telephone company calling card.
“This is a growing multimillion-dollar business,” Vogt said. There are about 35 companies in the field, and the FCC is checking into seven of them.
While the FCC is asking these re-sellers to furnish their billing and operational procedures, the initial investigation is focusing on whether there should be some provision made for adequate notice to consumers.
“Hotels have a responsibility to let guests know,” Vogt said. “Many people have no idea who is handling their phone calls. Once they do, they may vote with their pocket books on what service they use.”
John Brinker, corporate director of communications for Hilton Hotels, said: “None of our company-owned hotels use AOS firms, and if we did we would provide notification to guests. We’ve been wary because of the gouging, but the major AOS companies are changing their policies to provide service at AT&T; rates.”
Hiltons Have a Choice
Hotels operating under the Hilton banner on a franchise basis can make their own selection of a phone carrier, Brinker said. “Only a few are using AOS companies.”
At airports and other places, travelers should check to see if the name of a local phone company is on the phone, such as GTE or Pacific Bell in the Los Angeles area, Vogt said. “If you don’t see such a name, that’s a possible indication that an alternative operator might be involved, but that’s not a foregone conclusion.”
Some operators announce the name of their company when they speak to you. If you don’t hear or recognize the company’s name, Vogt suggested that you ask for such identification and for the rates to be charged.
The problem, of course, is that consumers may lack a good frame of reference on what a reasonable charge may be for that connection. “Generally, these alternative operators charge more than AT&T;, though it varies,” Vogt said. “It could be as much as 10 times higher. Often, it’s two to three times higher.”
Brinker also suggested that hotel guests ask the AOS operator what the charges would be for the call they plan to make.
“Travelers should realize that AOS companies may subscribe to several carriers to cut their costs, so your call can be routed through one supplier from Los Angeles to Denver and another company from Denver to your party in New York,” Brinker said. “These lines are tied together by switching equipment, but sometimes it can mean impaired transmission.”
Ask for a Transfer
If you decide not to go ahead with that call with an alternative company, ask the operator to transfer you to another company, Vogt said. “Some companies can do this, but others can’t. If the operator can’t switch you, then go to another phone at the airport.”
It’s only when you get your phone bill that you will be sure of discovering the identity of the phone company handling your calls, Vogt said. “And this can be a month or more later.”
Complaints can be made to the company involved, Vogt said. You can also file complaints with the Federal Communications Commission, Informal Complaints Branch, Common Carrier Bureau, 2025 M St. N.W., Washington, D.C. 20554.
“We contact the company. Most of the complaints have resulted in the consumer being issued a credit for the difference between what the charge was on his bill and what AT&T; charges for the same call,” Vogt said.
Hotels may use such an alternative operator service because it can mean extra profits. “When we deregulated hotels and motels providing long-distance telephone services in the early 1980s, they could then charge what they wanted,” Vogt said. “Previously, they had to charge what AT&T; charged.”
Calling Cards
As long-distance phone carriers encourage use of their telephone calling cards, this has cut into the potential revenue that hotels can get from guests charging calls from their rooms.
“These AOS suppliers help hotels to compensate for this loss in revenue by paying them commissions on calls using their systems,” Brinker said.
The specific rates charged for room-made long-distance calls may also be a matter of negotiation between the AOS and the hotel, said Larry Chervenak, president of Chervenak, Keane & Co., an international hotel-consulting firm in New York.
“Hotels can establish what the guest will be charged by legitimate AOS operators,” Chervenak said. “It could be no surcharge at all, or the equivalent of AT&T; rates, or it could be a reasonable surcharge for the service provided. This business has grown so fast that some outfits are buying re-sell rights from other AOS suppliers, and there are fast-buck artists in this field too.
“Most hotels are protecting their guests by negotiating reasonable rates in their contracts, but some got caught in long-term contracts when this technology came on line, without understanding the implications.”
As a rough estimate, Chervenak said about 15% of U.S. hotels and motels with 100 or more rooms are using AOS firms.
Several states, as well as the FCC, are looking into AOS operations. The New Jersey Board of Public Utilities earlier this year found that AOS operations were adequate as long as the calling public can make a willful choice.
