Customers’ Dialing Puts Dollars in ‘900' Company’s Pockets : Communications: A provider of pay-per-call phone services profits, but feels the effect of consumer groups’ complaints.


Sportswriters jeer it, but one of the popular “900" pay-per-call phone programs right now has Oakland A’s baseball slugger Jose Canseco providing recorded messages so his fans--for $2 a minute--can hear about his recent performance, get a batting tip or leave him a message.

Dial the number in Southern California and your call is taken by Pacific Bell or GTE and handed over to a long-distance telephone company, which sends it to a telecommunications complex in Las Vegas that is the home of Audio Communications Inc., the company that produces Canseco’s program.

ACI, whose West Coast sales office is in Canoga Park, claims to be the nation’s biggest provider of 900 numbers, handling about 350 programs that were developed in-house or for others. The company, owned by Las Vegas businessman Jim Feist, says it receives 1 million calls per month that provide it with $50 million to $75 million in annual revenue.

Besides Canseco, ACI’s programs include messages from rock stars, such as Paula Abdul, and rap singers, such as MC Hammer, horoscopes from Sydney Omarr and stock tips from Wall Street analysts. ACI also offers a phone version of the game show “Family Feud,” in which callers accumulate points each time they call (for 95 cents per minute). Magazines and retailers use ACI’s 900 service for promotions.


But with ACI’s success has come problems. Although the company says it runs an honest shop, the entire 900 business has come under criticism from consumer groups for being more hype than information. And ACI feels the publicity’s sting along with its rivals.

The 900 industry overall was born in the early 1980s but did not take off until 1988, and now it encompasses thousands of services that had combined revenue of nearly $500 million last year, according to Rich Parkhill, who publishes the trade magazine InfoText in Capistrano Beach.

“It bothers me a lot, the criticism,” said Charlie De Natale, who along with Floyd O’Neil and Kris Kupczyk are ACI’s top officers in Canoga Park. He blames some bad apples in the 900 business that, in not delivering what they promise, are not making “this instrument a valuable source of information and entertainment for people.”

Feist said the fraud that does occur on 900 programs--namely, advertising a product and then not delivering it--has been done for decades in other media, but “because 900 numbers are so new, they’re getting an awful lot of attention.”


Another blow came last week, when Consumer Action, a San Francisco-based consumer group, issued a study that blasted the 900 industry for fraudulent advertising. The group said “most advertised 900 numbers are unfair at any price,” and urged state and federal regulators to stop “the rip-offs that increasingly characterize pay-per-call services.”

Consumer Action did not cite ACI nor any of its programs, and group researcher Stephen Texeira acknowledged that “there are certainly some legitimate players.” Still, the complaints involve ACI at least by association. “It’s a problem,” said O’Neil.

ACI also is not mistake-free. At one point last year, Canseco was supposed to update his 900 message every day, but didn’t bother for three consecutive days, De Natale said. So ACI’s customers weren’t getting what ACI was advertising either.

“We had to track the guy down to make sure he doesn’t do this again,” De Natale said. “It’s not his neck that’s really on the line. Yeah, he’ll get the criticism in the paper, but we can’t afford in the 900 business to have that kind of thing happen.”


Besides keeping Canseco--whose 900 fee is not disclosed--on a short leash, ACI has another strategy to boost its image along with its revenue. The company increasingly is trying to get Fortune 500 companies to use 900 numbers for selling their products and services, sampling public opinion and offering sweepstakes promotions.

“Corporate America is where the business has got to go,” O’Neil said. “We’ve got to legitimize our business much more. A lot of get-rich-quick people have hopped on the bandwagon, put up programs and then walked away to go on to some other business venture.”

The 900 programs initially were too closely tied to adult phone services, which left corporate America “sitting on the sidelines for years, afraid to join the game, because of fears of tainting their corporate image,” he said.

Those fears have abated somewhat, with companies such as Procter & Gamble, Revlon and ABC Television developing 900 services. In addition, the blue-chip companies American Telephone & Telegraph and American Express last year formed a joint venture, Call Interactive, that develops and operates 900 programs for others.


ACI offers a similar “service bureau,” in which someone can get a 900 service started for under $5,000--excluding advertising, which is the biggest cost in launching a successful 900 program. About half of ACI’s revenue comes from its service bureau.

As for ACI’s plan to solicit more Fortune 500 accounts, the idea is not unique. Call Interactive, which has 140 pay-per-call programs, also focuses on “business-to-consumer applications,” said Brian Rivette, vice president of marketing.

Call Interactive also is trying to improve the public’s perception of 900 services by closely evaluating each 900 proposal it gets and looking “for programs that offer the caller a value equivalent to the amount paid” for the call, he said.

Feist, 46, started ACI in 1987. But he’d been investing in 900 since the early 1980s, when he started a 900 service that gave out sports scores. Correctly assuming that the 900 business would eventually explode and carry fatter profit margins, he made a multimillion-dollar investment in 900 channels and in telecommunications and computer equipment to handle the calls.


Today, calls to ACI’s numbers average about 3 minutes, and the fee that ACI and the telephone companies get from each call varies. But in the case of a $6 call to Canseco’s line, the long-distance carrier--in this case Telesphere Inc.--gets $1.71 and ACI gets the rest to cover its costs (including Canseco’s fee) and clear a profit, De Natale said. The local telephone company, such as Pacific Bell, that initially hooks up the call negotiates its own fees with the long-distance carrier, he said.

What if Canseco goes into a slump? De Natale isn’t worried, because Canseco’s popularity stems as much from his controversial personal life as from his batting average. In fact, he’s the only sports star ACI is currently touting.

“We do not believe in the potential of other sports personalities right now,” he said. For instance, rival New York Yankees slugger Don Mattingly “wouldn’t draw flies” on 900 because he’s “low profile,” De Natale said.

But De Natale is looking for the day when Canseco shares the 900 stage with the likes of Kellogg and Kimberly-Clark. “All we have to do to maintain our status is align ourselves with these people,” he said.