PUC Hearings Cast PacBell as Aggressive Marketer

Internal Pacific Bell marketing documents presented during regulatory hearings last week shed new light on the breadth of the phone company’s aggressive efforts to boost the sale of add-on services in California.

The documents--ranging from caller ID marketing plans to research into the use of the label “basics” when selling nonessential features--were submitted to state regulators by consumer advocates as evidence that PacBell’s stepped-up sales campaign is unethical and misleading and pushes customers to buy phone features they don’t need or want.

Those allegations are at the heart of a complaint filed last year urging the California Public Utilities Commission to halt certain PacBell practices and force the state’s largest phone company to pay restitution to customers who paid for features they didn’t want.

Attorneys for PacBell, a unit of San Antonio-based SBC Communications Inc., say the company has not violated any state rules. In addition, PacBell lawyers said there are relatively few customer complaints about its sales methods, and that PacBell fires employees who engage in improper conduct.

“We have the right to sell,” said John Britton, a PacBell spokesman. “We don’t believe we are doing anything outside the rules of the PUC.”

The company also has rejected the notion that it is required to provide customers with unbiased information about caller ID blocking options, the free features that allow callers to block the display of their name and number on other people’s caller ID boxes.

PacBell service representatives are told to avoid telling customers about “complete blocking,” the option with the most privacy protection, because its widespread use undermines the value of caller ID for that service’s subscribers. In addition, the company has been calling and sending mail to customers who have complete blocking to persuade them to switch to a less protective option.

The complaint against PacBell was filed by the Utility Consumers’ Action Network, a San Diego consumer group; the Telecommunications International Union, a small labor union whose members work at PacBell; and the Greenlining Institute and the Latino Issues Forum, both advocacy groups based in San Francisco. The Office of Ratepayer Advocates, the independent consumer advocacy arm of the PUC, also joined in the complaint.

For five days last week, attorneys for the groups and for PacBell sparred over evidence and testimony before PUC Administrative Law Judge Maribeth Bushey. A final ruling on the complaint was expected by early April, but the judge said she will probably request more time.

If PacBell is found guilty of any violations, the judge can order the company to cease certain practices and pay restitution and fines.

During the hearings, the consumer groups criticized PacBell’s use of the terms “the basics saver pack” and “the essentials” and other words to describe service packages loaded with extras such as caller ID, three-way calling, call waiting and other features.

“The use of the term ‘basics’ to describe packages of optional custom calling features is misleading because basic service is commonly understood as the most simple, basic service available--a dial tone,” said Guillermo Rodriguez Jr., former executive director of the Latino Issues Forum, in his testimony. He said the distinction is particularly problematic for Latino customers or PacBell customers with limited English language skills.

A study conducted for PacBell in 1997 underscores the potential for confusion when selling a “basics” package. In a focus group, “several respondents said the name implies plain old telephone service (‘a phone that works’), whereas the package includes bells and whistles they believe they can get along without,” the PacBell report said.

A growing number of PacBell employees have complained that they believe the company’s emphasis on selling packages and other highly profitable features, along with the use of cash bonuses and management pressure to meet monthly sales goals, is harmful to PacBell customers.

“I think what we’re doing is extremely confusing and misleading, and our customers are not understanding,” said Janet Spector, a 23-year PacBell service representative who testified at the PUC hearings. “They are basically tricked into getting this stuff.”

Spector said she balks at using the company scripts and pressuring customers and thus does not book enough sales to win the cash bonuses offered to big sellers at PacBell. But she said many of her colleagues engage in unethical selling to win the money and prizes.

Three service representatives made available for interviews by PacBell rejected those allegations and said their customers appreciate knowing about special deals on PacBell services.

LeeAnn Janek, an eight-year service representative who works with Spector in the Van Nuys office, acknowledged that some employees don’t like the sales incentive programs, but added, “They’re not the majority of how our team feels.”

One of PacBell’s biggest marketing pushes is aimed at caller ID, a subscription service that requires special equipment and costs $6.50 a month for home users. The service is one of the most profitable add-on features for phone companies, but it has grown slowly in California. PacBell’s most recent promotions included sending customers caller ID equipment even though they had not signed up for the service, leaving the customers with the hassle of returning it if they did not want it.

An October 1997 caller ID marketing plan outlined how the company planned to increase the caller ID subscriber rate from 2% of customers at that time to 30% by 1999. That leap would boost revenue in the region by $210 million, the company noted.

The plan noted that it would push caller ID especially hard in households with Spanish speakers, especially groups of customers it called “struggling city dwellers” and “income limited.”

*

Times staff writer Elizabeth Douglass can be reached via e-mail at elizabeth.douglass@latimes.com.