AT&T; Suit Says MCI Deceives Customers

Rivalry heated up in the long-distance telephone market today as American Telephone & Telegraph said it is suing MCI Communications over what it called unfair and deceptive moves to sign up long-distance customers.

The lawsuit, filed in U.S. District Court for the District of New Jersey, alleges widespread switching of long-distance customers to the MCI service without their consent.

AT&T; said it also asked the Federal Communications Commission to amend its rules to protect consumers in their future selection of a long-distance company.

“People are being hoodwinked,” said Merrill Tutton, AT&T; vice president for consumer services, adding that a significant number of customers who have been switched have chosen to come back to AT&T.; “In fact, a large number of them have been very irate.”

The lawsuit charges MCI and its telemarketing agent, Pioneer Teletechnologies, used “misrepresentations of fact to induce AT&T; customers to switch their long-distance service.” Pioneer is 25% owned by MCI.

MCI and AT&T; have been frequent court adversaries since MCI began competing for a share of the long-distance telephone market dominated by AT&T.;

MCI’s growth has been rapid in recent years since it began to expand from its base as a discount, consumer-oriented service to a business telephone provider.

AT&T; said the allegedly deceptive practices have resulted in confusion, inconvenience and expense to consumers and cost AT&T; tens of millions of dollars in lost revenues. AT&T; did not specify the total amount it was seeking.

The telephone giant said that in some cases MCI sales representatives have told its customers that AT&T; is no longer handling long-distance calls and in some cases that it is going out of business.

AT&T; said preliminary studies show that between February and November, more than 10%--and reaching up to 15% in some cases--of monthly conversions of residential customers to other long distance companies involved customers who either had never been contacted by the other company or who had declined to switch.

The lawsuit asks the court to order MCI to stop making false, misleading or deceptive claims about AT&T.;

It also asks the court to order MCI to refrain from switching AT&T; long-distance customers to MCI without authorization and for MCI to help mitigate damage caused by its actions.

AT&T; said the rule change it proposed to the FCC would require all long-distance companies to obtain written customer permission before notifying local telephone companies of a customer selection of a long-distance carrier.

While the lawsuit against MCI does not specify any damage amount, it outlines categories of damages, including lost revenues cost, legal fees and provision for “trouble damages.”

AT&T; still claims about three out of four residential customers, but analysts said MCI and US Sprint are gaining ground. MCI has about 12% of the business and Sprint 10%.

The most bitter rivals are AT&T; and MCI. The two filed suits against each other last year challenging the accuracy of each other’s advertising.