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The Almighty Buck

Telcom Fraud: The Previous Generation 213

theodp writes "Remember back in the day when telcom firms were charged with simple, good old-fashioned consumer fraud? AT&T and Lucent got a history lesson Friday, agreeing to a $300 million settlement related to claims that they used confusing billing statements to mislead consumers into paying lease charges for their home telephones, including the timeless rotary Traditional, that totaled many times more than the actual value of the phones."
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Telcom Fraud: The Previous Generation

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  • had one of those (Score:1, Interesting)

    by Anonymous Coward
    My parents had one of those rotary phones that they "leased" from the phone company. Must have paid for it 20 times with the number of years they were had it.
    • Strange, this sounds familier.

      The phone company wanted to "Lease" my DSL modem to me too.

      Fortunately I can do math and determine that purchasing the modem is better than leasing if I intend to use it for more than a year.
      • They'll find a way to screw you over still. Wait until you want to switch ISPs or upgrade to a higher bandwidth connection. You're going to hear: "You have a Cisco 675? You need a Cisco 678 to upgrade your account. Do you want to lease or purchase it?"

        I work at an ISP and Qwest has already tried to pull that over on some of our customers. We ended up talking to a few people at Qwest and convincing them it wasn't needed.

  • by Raiford ( 599622 ) on Sunday August 11, 2002 @01:11AM (#4049200) Journal
    How many other items in your home are leased from a utilities service? How much are they worth ? This could be the tip of the iceberg for much more litigation.

    • Adelphia used to charge us something like $5/mo for the cable box and $10/mo for the cable modem when I had cable modem. Those charges are conveniently off the bill now, although they are still charging us the same price. And the price of my current package is due to go up $4 very soon.

      Maybe they'd be a good target for yet another law suit. Not that they'd be an especially deep pocket to go after in their current condition...
    • Here's an item that you may have in your home, but which is often rented for no good reason by offices: water coolers.

      Where I live, I can get a water cooler rental at $8/mo with a cold tap, and $14/mo with a hot tap. Most people just go ahead and rent the water cooler, and get the water delivered.

      On the other hand, you can get a water cooler with both cold and hot taps for $150. I just found a friend of mine who owns a small business has been paying $8/mo for five years now. He cut that out pretty quickly.

  • Wow what's going to happen in the future as the sharing of information becomes even more integrated into society?
    The Telcom Industry - yet another possible source of a large-scale collapse of civilization as we (might) know it.
    Technology can be so depressing at times...
  • by zapfie ( 560589 )
    Hey, I see some marketing potential here...

    "On the next episode of 'Telcom Fraud: The Previous Generation'.."
  • But this is really really old news. I'm surprised that anyone would still be motivated to go after something like this. (Well, except for a law firm that would get the cut.) The money certainly is a bit of a punishment for AT&T. But what, are we actually going to see money from this? This really wasn't worth going after, for the average guy.

    BTW: I really am considering getting a rotary with a big-ass ringer back in the house. Those were the bomb. And it'll keep the kiddies away from the phone -- they won't know how to use it!
    • I'm 20, and I have and use a rotary phone that my grandfather used to own. This makes me (just about?) the youngest person on the planet with one of those. I swear, it must weigh 10 pounds and is built like a sherman tank - it must be 90% metal.
      • I used to have one until about 5 years ago, I don't know what happened to it after that. (I'm also in the same age range as you, for the record.)

        Anyone who's never used a rotary phone doesn't know what they're missing. I used to have fun as a kid just turning the dial and listening to it spin back... 'clickclickclickclickclick'
        • You darn kids!!

          My phone number back in the day (when I had to walk 17 miles in the snow to school.. uphill.. both ways) was Five. There were only 10 phones in the world, and I had one of them. And you!! Always dialing my number and hanging up.. I'll get you yet, you darn kid!
      • Those metal phones sure cleaned easily, and the cloth wrapped cords sure looked nice. I hate these plastic phones, they look cheap and feel cheap.

        Hehe, I remember the old slogan "German Engineering" and I think of those old phones that work forever. Even thou they are american made. :)
      • I'm 20, and I have and use a rotary phone that my grandfather used to own. This makes me (just about?) the youngest person on the planet with one of those.

        sorry my 13 year old daughter has one. when she saw it in a old box of junk she had to have it. she thought it was sooo cool
    • by srw ( 38421 ) on Sunday August 11, 2002 @01:37AM (#4049277) Homepage
      True story:

      A few years back (1992-4) I worked as a counselor at a summer camp. We had a fairly strict policy about not letting kids phone home unless there was a really good reason. One of the kids in my cabin was given permission to phone home, but he then started crying. It took me a while to find out his problem: The phone at the camp was one of the classic rotary wall phones and he didn't know how to use it.

      I would guess this kid was 8 or 9 at the time.

      I dialed for him, and all was well. He'd be 16 to 19 now. I hope he's learned to use a rotary phone since then.


  • Cable companies charging a $15 rental fee/month for cable modem rentals...
    • Its only illegal if its misleading/confusing on purpose, for the intent of fraud.

      I can lease you a worthless bit of metal for $100,000 a week if I want, just so long as you know its a worthless bit of metal.
    • Actually, many MSOs are now lowering the rental fees to discourage you from buying your own modem. To be fair, I'd much rather rent my modem than buy - the first time you have an internet problem, do you think tech support will believe you when you say your cable modem is working fine, and then problem is on their end?

      I think not, they'll pin the entire problem on your faulty modem.
  • by I Love this Company! ( 547598 ) on Sunday August 11, 2002 @01:13AM (#4049212)
    The "confusing" billing statements were mailed to residents of Palm Beach County?
  • by jyang ( 86770 ) on Sunday August 11, 2002 @01:16AM (#4049217) Homepage
    Just got a class action notice the other day from Verizon wireless. It said essentially "if you do nothing, you'll receive some coupons worth $10 - $20, and give up your right to receive settlement. Or you have to send a opt-out letter to provided address to participate in class action settlement".

    I don't know what piece of legislation allow companies to do this. It is better for consumer that settlement is opt-out (do nothing and you'll participate in settlement).

    Of course I actually send my name address to opt-in to this particular settlement. Darn thing that postal service raised postage again I end up using 2 32cent stamps.

    Somehow I'll be had...
  • If memory serves me, the cable company (I think Comcast) is still charging my parents for a cable box they leased from them back in the early 80s. And the remote to it. Sure, its only like $2 a month or something, but for 20 YEARS? Needless to say, the remote is long lost, and the box has been 'destroyed' (via disassembly and reassembly).
  • by ejaytee ( 186527 ) on Sunday August 11, 2002 @01:22AM (#4049234)
    Well great, so a practice that appears questionable at best is coming to a close.

    Here's my problem with the universe of class action lawsuits: out of this $300 million, the lawyers are going to take 30% or so. This is a tidy little sum. The people who were gouged are going to end up with not-so-much relative to the amounts they were "overbilled". Probably less than the inflation-adjusted price of a Princess telephone.

    The article even mentions that some of the settlement money comes in the form of calling cards donated to charity. This doesn't remediate the damage to the class in any way whatsoever, but it does help to pump the total value of the settlement (and hence the total value of 30% of the settlement.)

    The class-action phenomena is great for lawyers who can come up with new and innovative reasons to sue companies for large sums of money.

    Where it's abused, they cost all of us (the end users) a little bit of money, earn the litigators a lot of money, and often accomplish nothing more than what could be accomplished with a press conference or two to bring pressure on the company to stop.

    Perhaps I am just growing cynical.
    • The key is to make sure that the terms of the settlement specify that it actually does come to a close. About three years ago, I was checking the bills for an elderly friend of mine while he was out of town. I came across one of these bills -- it was not at all clear what it was for. At first and second glance, it looked like it might be a standard phone bill. He was fooled for 17 years.... Hopefully, the lawyers will insure that a mailing is done to all victims to insure that people have to opt-in to continue making these payments, and that they clearly understand that they can purchase the units at nominal cost.
    • This is a tidy little sum. The people who were gouged are going to end up with not-so-much relative to the amounts they were "overbilled".

      Which is a fair amount more than they would have had if the lawyers hadn't done the footwork.

      Don't get me wrong, I'll grouse about lawyers' jackpots just as much as the next guy--but lawyers do work for their money, and most of them don't get windfall cases like this one. A database administrator is just as likely, in most cases, to make a salary competitive with a lawyer; but we don't complain that the DBA makes too much. Add to that the fact that lawyers do have a significant place within our society. I don't have statistics for how many of our current Supreme Court justices practiced law before they became judges, but I'd make a bet that all nine of them did.

      I'd rather see lawyers make the money than professional athletes. Two or three generations, what do we have to show for the hundreds of millions of dollars we wasted on them?

    • Here's my problem with the universe of class action lawsuits: out of this $300 million, the lawyers are going to take 30% or so. This is a tidy little sum. The people who were gouged are going to end up with not-so-much relative to the amounts they were "overbilled". Probably less than the inflation-adjusted price of a Princess telephone.

      I once had a Providian credit card with like a 5.9% intro rate that was supposed to last for a year, and a 9.9% rate after that. Another bank bought them and raised the rate immediately to almost 27%. I got quite upset and tried to talk to them and they said there was no record of the 5.9% rate was supposed to go on for some time. Well I paid down the balance which took a few months since I had transfered all my other balances to the card. So I was out a few hundred bucks.

      About a year and a half later I get a statement saying I can get a real low rate for a year if I sign up again because of a settlement in a class action. I could also refuse that and get a check for like $25, but the lawyer already took a $100 on my part for the $300 value of my settlement.

      Still I'm happy that the new bank paid someone for their evil. And the $25 is better than those $1000 rebate checks people get to buy another car from the same company that sold them the auto-kill-passengers model.

      I think I also received a bunch of coupons from some phone monopoly a while back too, never used any. They had billed $2/mo for some imaginary service for a couple years. It seems to me that these settlements are always too low, it shouldn't pay to commit fraud. Criminal charges are the only real solution. But if that were evenly applied our president would probably still be in prison. :/ Until then, the bigger settlements probably discourage some fraud, since the fraud itself hurts the non-monopolies, like that credit card company I left, in the long run. Combined with the settlement of the lawyers fees it may actually make some of it not pay.
  • My mom leased one of our phones in the house for like 20 years. IT was a fun deal. It was like 25 cents a month, and they couldnt raise it because the contrat was so old. We used to drag on of their poor linemen out ther every couple of months cause the dog chewed through the phone, and they had to replace it free. Serves em right.
  • Anybody who doesn't read their bill before paying it is a jackass anyway. I look over my credit card bill every time...same for phone bill just to make sure. I've had to call the phone company a couple of times because of calls that I know were not made, and they dropped them from the bill.
  • by hillct ( 230132 ) on Sunday August 11, 2002 @01:38AM (#4049280) Homepage Journal
    It's good to see this issue finally resolved, but this isn't the limit of the sleeziness of AT&T et al. Equally as disturbing as the phone lease charges addressed in this suit, is the ongoing bilking of cutomers who don't keep up on service plans and pricing opportunities. Many elderly customers (including, my grandparents, as I duscovered a few years back) are still recieving service at AT&T's base rates, from the late '70s, without the advantage of any of the pricing plans currently available upon request from all long distance carriers. Certainly the argument that it is the customer's responsibility to investigate pricing opportunities, is not without weight, but there are AT&T customers still recieving Pro Watts service, which in my case I discovered, then I tried to dial an 888 number from my grand parents redidence. Upon review of their bill, and with one 5 minute phone call, their bill was reduced by almost 70%, but the carriers are under no oblication to move customers to any particular rate plan at any time, and because the customer demographic which includes senior-citizens does not demonstrate elasticity in their telephone calling patterns, such that regardless of pricing, they will likely make the same amount of calls; there is no incentive on the part of carriers to offer them any more modern pricing plans. This is particularly interesting because over the past 20 years, it has been common opinion within the telecom industry that as market pressures drive pricing for basic calling services down, that refenue differential will be recouped through the pricision of more advanced services such as caller-ID, 3-way calling, distinctive ring, and so on.

    At some point it will no longer be cost effective to treat their customer base in these two wildly divergent ways, and telecom carriers will be forced to bring their pricing into allignment elderly customers, althoufh this will have the down side of pringing down on these customers, that deluge of telemarketing calls from competing providers - a joy to whih they have been to some degree spared thus far.

    • Considering all the "slamming" AT&T, MCI, et al did back in the 90s (and still do, near as I can tell), I find it very difficult to believe that anyone is still on the same plan as they were in the 70s.

      ::Colz Grigor

    • Not all are sleazes. (Score:2, Interesting)

      by Ckid ( 147526 )
      In Canada, Telus, Telus Mobility, and Microcell (Fido) automatically (and I do mean automatically) call thier customers every six months and let them know that, based on the customers usage, they are on the best cell plan/long distance plan/whatever. And if they are not, will recommend one that fits more into thier usage patterns.

      I think it's the whole cupon strategy, if clients think thier saving $0.10, they'll spend an extra dollar. I wonder how it's worked out for them, personally, I appreicate it.

    • The carriers aren't under any obligation, whatsoever. In the business world, at the end of your contract, you can renew, go with a competitor, or negotiate new rates. This is no different. No company is obligated to save you money because you aren't smart enough to turn on the TV and see a different rate advertised, and age certainly isn't an excuse. I'd warrant saying if an elderly person can't manage to verify their phone bill is high, then they probably aren't competant enough to live alone or make financial decisions in the first place.
    • Until recently, my grandma has been renting old rotary telephones from the local Bell, dating to 1972. The phones were leased for something like $5 a month per phone (two phones total). She refused to give them up, saying "if they aren't broke, why fix them?" and felt she had no business pleading with the phone company to lower her rate. I called Bell personally, asking why the heck they are ripping my grandma off for all these years. I told them in all, she has payed over $1800 per phone over the last 30 years. They agreed that it was expensive, and decided to let her keep the phones at no additional cost (gee, how nice).

      The sad thing is, they still work...
  • I think the term is either Telco or Telecom, but not Telcom.

    As a side note, remember way back when you could actually dial a number, and it would ring your phone? I think it was something like 057-and then your phone number, or something like that.

    We had a rotary phone in our house until it was fashionable for people to have those new fandangled cordless phones.
    • Usually, "telco" refers to TELephone COmpany and "telecom" (or "telcom") to TELECOMmunications, the industry occupied by such a company. Both could technically stand for either, but "co." is a more common abbreviation for company than "com" (at least before the internet frenzy). "Telco" is an enumerable noun (you call up _the_ local telco), while telecom is not (someone working in telecom; the telecom _industry_).

      Most areas do have a ringback number (rings your phone, usual procedure is dial it and N digits of your number, get a dialtone, hit the hook or flash, get another tone, hang up) and an ANI number (automatic number identification; a voice reads out your phone number), which the service technicians use frequently.

      For instance, in central (charlottesville) virginia, the ringback for sprint is/was 511 and 7 digits of your phone #; the ANI is 118. Numbers for many areas can be found in the 2600 FAQ, but it's not complete or up to date. These numbers sometimes change when switching equipment is replaced.

      • Whooaaa cowboy, slow down, don't phreak out on us. lol ;)

      • I remember as a kid that we used to try "getting Mars to call"

        We would dial a number, hang up, and a few minutes later we would get a return call that would be all random noise.

        I realize now that what was happening was a modem was picking up and attempting a dial back.

        After a few months the number didn't work anymore. No "out of service" message, it just didn't respond, just dead air.
  • He had had that phone since the 1940s. He 'rented' it every month - it was one of those old, huge, black rotary phones. I can imagine he's paid well over a few hundred (if not over a thousand) dollars over the years for it.
  • I like how the phone companies used to charge extra money for touch tone dialing. Nevermind that it saved the phone companies millions, if not billions, of dollars per year. Shouldn't they be charging people to use pulse dialing? It's good that things like this don't still happen. Do they?
    • I like how the phone companies used to charge extra money for touch tone dialing. Nevermind that it saved the phone companies millions, if not billions, of dollars per year.

      Notice how banks do the same thing. I'm sure sure ATMs and Internet banking save them money (no tellers to pay), but they add service charges for "the convenience". When was the last time you could ask an ATM a question?

  • Ah, there it is, in all its pink glory... The Princess-phone! How I have longed to possess one of these beauties, how I have sought for its rare splendor, no price's too high for this baby...

  • by loraksus ( 171574 ) on Sunday August 11, 2002 @02:07AM (#4049358) Homepage
    Yet Qwest is still doing what they have been doing for the past several years.
    I rather like how they handle the situation, have shitty customer / telecom service, get fined, go to court, negotiate w/ govt, say that they will add more phone / data lines to rural areas (which they were already planning to do anyways), get their fines reduced and pay almost nothing.
    That and piss away shareholder money like a college student at a kegger, forcibly switch their dsl customers to MSN, and sell your personal information.
    Same shit, bigger pile methinks.

    (perhaps I'm still a little bitter about the whole msn thing)
  • by NeuroManson ( 214835 ) on Sunday August 11, 2002 @02:09AM (#4049364) Homepage
    Just watch the ad spot for AT&T digital cable, where they try to dispute the second "Digital cable is much more expensive" "rumor"... Digital cable, by their own admittance, is $69.99 per month, or over twice the price of basic...

    What part of "more than twice the price" doesn't translate as "much more expensive" in any sense of the term? Sounds like fraud and false advertising to me...
    • They most likely have an unadvertised internal deal for $69.99 basic cable, so they can say that it's the same price. Kinda like stores that have "sales" on items that happen to have recently been marked up *gasp* the exact percentage of the sale!
      • Blockquoth the poster:

        Kinda like stores that have "sales" on items that happen to have recently been marked up *gasp* the exact percentage of the sale!

        Well, actually, that would result in a discount, albeit a small one. Assume the original price is p and the advertised percent markdown is f. Then the internal price (before the markdown) would be p'=p(1+f) and the sale price would be p''=p'(1-f)=p(1+f)(1-f), which of course is p(1-f^2). For f > 0, p'' < p... but by much less than the advertised amount.

        (So, the really said thing is, I formatted those equations by hand in HTML. Ugh.)

  • I recently had a huge problem with Wired Magazine. I've paid through Jan04 - their subscription site says so - yet the site says "Your account is paid and active, but we are awaiting your renewal payment" - showing a payment due of $12!

    Not only that, but I got a letter from a fucking collection agency - on a bill for a VOLUNTARY magazine subscription DUE IN JANUARY OF 2004! If they try docking my credit, I'm so suing...

    Angrily worded letter is on the way as we speak...
    • Maybe if you got off you're geeky little ass, stoped programing some perl shit that does nothing and reinstalling winows damning gates to hell, and CALL them. Shit like this happens, you can' t just ignore it. You probably just emailed some generic wired mail and let it as that. They've probably already lost it to autoreply filters. You know we see this more and more, where people get upset that something goes wrong, but they don't do jack shit about it but complain. People need to take action against these fucks.
      • Nice attempt at a flame. Actually, I don't know Perl, and prefer Windows to Linux (I've been called a wintroll a couple times). As for e-mailing them - nope. I've sent them a letter via certified mail, as well as a copy to the debt collection agency (though I imagine it's a Wired-owned one). I'll sue if they try knocking my credit rating.

        So, in conclusion... fuck off.
    • You should scan all that shit in and put it on the web. Nothing like generating a fsckass amount of bad press to get a company to fix their broken shit. What you did, certified letter etc... will probably work but does nothing to fix the general problem.

      I wish there was a website like or something witty that devoted itself to showing how companies are screwing us everyday.


  • by Featureless ( 599963 ) on Sunday August 11, 2002 @02:16AM (#4049378) Journal
    Four years ago I signed up with a local and long distance phone company called Econophone. One of the new breed of de-regulated, privatized competing phone service providers, they were offering rates for local and long-distance calls well below half what AT&T was, and still significantly cheaper than Verizon.

    I used them successfully for two years, and paid very little for phone service. 5 cents a minute national long distance and comprable local rates.

    How, you ask? De-regulation, which happened under Clinton in the mid '90's. However, once de-regulated, the baby bells immediately began testing the resolve of the federal regulators to force them to deal fairly with their "client competitors" for local & long distance service. You see, they wanted the good parts about de-regulation (being able to diversify, charge whatever they wanted, etc.) but not the bad parts (actually having to give up their monopoly status). They fought tooth and nail battles over various regulations and did their level best to kill their competitors... by bribing regulators to get call-completion charges, by systematically failing to service their new clients properly, and, now and again, by slamming their customers.

    Clinton's people were going to stick it out and fight the bells into submission. The Bush people had a more, shall we say laissez faire attitude about it, and the last two years have all but brought about the end of competition among the bells, first as the feds looked the other way while they turned their embrace with their competition deadly, and now as the FCC is actually going to rubber stamp their new "pseudo-monopoly" status, enshrining the notion that bells need not lease their lines to anyone, just like they already did with cable.

    Econophone is bankrupt. Many of you remeber the Northpoint fiasco; Econophone was very similar. Not content with stealing their customers and bludgeoning them to death with sabotaged service, the bells had to make a show of violently disconnecting them from the network, without warning. The message: don't deal with the independents. You just never know what might happen to your calls.

    This industry makes billions of dollars a week. They are _printing money_. Their margins are _incredible_, and that's with some of the worlds most notorious bureaucracies. I've dealt with AT they just _hemorrhage_ money. Why not? They get paid most every time someone makes a call.

    De-regulation was a failure. Not exactly because it was inevitable, but because it was never really intended as anything but ideological cover for more and better price fixing. $5/mo for call waiting service anyone? Or how about $3.50 for _not_ publishing your number in the phone book?

    You might say the little carriers like econophone went out of busines because they didn't charge enough. But I don't think those people made a math error when they founded their company and calculated what they could charge. I think we got a brief glimps of what we _should_ have been paying all along, before the Bells furiously covered it up.
    • There are plenty of alternatives too the major phone companies still out there. Check out or You do have to keep an eye on your phone bill, though. I was getting phone service from Sprint through for a while & when Essential went out of business I got switched (without notice) to a different Sprint plan that was 3-4x the price. As always, caveat emptor.
    • They should rename De-regulation to: Fuck-over the consumer. It'd just make more sense, and cut through the bull a lot faster. It's obvious that deregulation doesn't work, everytime this happens consumers get worked over. Edison was considered, what, a monopoly? Fuck they were barely holding california's power supply together, then deregulation came in and lobotomized them. Instead of lowering the prices on energy these assholes who bought the generators jacked it up, because they knew the supply was so great. Edison got fucked over, the consumer got fucked over, shit we're still feeling the sting. It's really sad.
      • Blockquoth the poster:

        they were barely holding california's power supply together, then deregulation came in and lobotomized them

        Nah, you just don't have the proper faith. Deregulation only fails because we don't go far enough. If deregulating industry A screws the consumers and deregulating industry B screws the consumers, it must be that if we deregulate all industries, it will help the consumer...

        Deregulations has been a long-term failure in each of the industries in which we've tried it since the late 1970s (with, admittedly, the partial exception of the telecom industry, where at least prices have generally come down -- although lack of vigorous oversight has allowed the re-emergence of local monopolies). Business clamors for it and certain elements in the government eagerly give it to them. But those same elements don't believe in spending dime one on enforcement of the associated conditions, and so the model collapses. Then we're left with the same old monopolies, but now they don't have any silly Public Utilities Commission breathing down their necks and "hampering their efficiency" with quaint oddities like fair practice regulations.

        The deregulation zealots bring to mind Santaya, but I don't know which quote is more a propos: "Those who cannot remember the past are doomed to repeat it" ... or "Fanaticism consists of redoubling your efforts when you have forgotten your aim."

        • You make a very good point, but I would argue that the deregulation/capitalist model is fundamentally flawed for some services; electric power, most notably, but also education, police...

          In the particular case of power, it's very simple: the incentives are exactly the opposite of what you want, since distribution over long distances is so inefficient.

          If you build power plants, the power supply goes up, and your product is worth less. Hence, your profits go down.

          If you do not build power plants, and/or take some of your plants off line, the power supply goes down, and then your product is worth more. Supply and demand! Whopee! Time to raise the rates! This is more or less what's happened everywhere this scheme has been tried; the only difference is that in California the distributor couldn't pass on the rate hikes because its end-prices were capped. Enron et al didn't mind, they just ran their rates up astronomically, ridiculously high for a few months, then turned off the lights (a negotiating tactic which actually took lives!), and even now they're probably still going to get the proceeds of the "utility bailout," so it's all the same to them.

          The only possible way the "private" power generation companies can fail to get rich is by doing what they're supposed to... which is, provide ample, cheap, environmentally sound generating capacity. If you want to make money, on the other hand, the opposite is true; it's in the private utility's best interests to use the cheapest, dirtiest power generating techniques available, to encourage as much waste as possible, to cultivate their most profitable volume buyers at the expense of their least profitable low and middle income customers, to run as close to 100% capacity as they possibly can, and, of course, to create artificial shortages. If the consumers don't like it, there's always electric blackmail.

          It's interesting to me that there did seem to be some early success in the telecom deregulation regime. One thing I would really like to spend more time doing is going over the actual laws involved... I have a feeling there must have been some interesting rules in there about how the incumbents have to operate for it to have worked at all.
          • Blockquoth the poster:

            If you want to make money, on the other hand, the opposite is true; it's in the private utility's best interests to use the cheapest, dirtiest power generating techniques available, to encourage as much waste as possible, to cultivate their most profitable volume buyers at the expense of their least profitable low and middle income customers, to run as close to 100% capacity as they possibly can, and, of course, to create artificial shortages.

            Unless, of course, we change the economics through (sensible) regulation. For example, massive penalties for pollution. (I'm actually a fan of tradable pollution credits coupled to absolutely devestating fines for failure to comply.) Another example: massive penalties for failing to provide universal access.

            The legitimate issue is, how do you ensure that the regulation is sensible? Obviously that's a judgement call. And, in pure Adam Smith terms, you're going to build in some economic inefficiency. If you're a free market ideologue who thinks government == Evil, then of course the only "sensible" regulation is none at all...

            Which is how we got into this mess in the first place: a generation of "government leaders" who hate the very jobs they occupy.

    • I look forward to the day when we can direct-dial via point-to-point links through user-owned wireless, bypassing the monopolies. Bloodsuckers will get what's coming to them...
    • Or how about $3.50 for _not_ publishing your number in the phone book?

      I hate that as well. It's $3.50 a month to be unlisted in the phone and the operator. Luckily, it's still free to tell them what name to list the phone number under. I know many a minor-league athelete that use their first name and their mother's maiden name as their last name. This allows relative anonymity from overzealous fans, as well as allowing their families to locate them in their new city should they get traded...

      Personally, I use a completely fictioal name that everyone in my family knows. It's also amusing because it shows up on people's caller-ID as well. Several of my friends are now doing the same thing, using Bart Simpson's imagination as a guide.
  • by Featureless ( 599963 ) on Sunday August 11, 2002 @02:37AM (#4049419) Journal
    It's 1996, and the bells have been newly de-regulated. They're pleased as hell, because they can diversify, but more importantly, because they can now charge whatever they want - price gouging galore! Time to raise the price of call waiting!

    There was only one pesky problem. The bells were now theoretically obligated to "compete" with other carriers. The nerve! Wasn't everyone informed that they don't share their playground? Wasting no time, they immediately set to work on the FCC and congress to try to roll back the regulations (or at least the enforcement regime) that allowed competitors to re-sell some of the network and compete.

    They came up with a great idea. Oh, it was a real doozy, and very simple. They convinced the feds to allow them to charge a "call completion" fee.

    It works like this. If a customer in one local phone company calls the customer of another, the originating carrier has to pay a fee to the receiving carrier for "completing" the call. This, reasoned the bells, was *it.* Who can start up a competing local carrier, if (since they're new) every call from their customers terminates at a bell-controlled phone, and they're saddled with 3c fees for every call! It's a classic "screwing the little guy with the power of math" scenario.

    It was a perfect plan. And it only had one fatal flaw.

    The metropolitan ISPs of New York City were some of the phone company's most enthusiastic enemies. And why not? Have you ever tried to get the NYC Bell to do anything more complex than a residential hookup? How about manaing hundreds of lines in a hunt chain... let me tell you. You lose a few every few months for no discernable reason, and during one of your dozen hour-long calls to the bell for support, you discover that in trying to "fix" your hunt, they've now disconnected your office phones as well. True story.

    The NYC ISPs were desperate to deal with someone, _ANYONE_ other than the local bell. So what did they do? They got together with a tiny, unknown little local carrier. And they became its first, and practically only, customers.

    And do you know what happened then?

    ISPs need lots of lines, and they're willing, nay desperate, to pay a premium for any kind of service exceeding the Soviet-block standard of the bell. They hardly ever make any calls out. But everyone calls an ISP. In fact, they get thousands and thousands of calls a day.

    Within days of getting their first 8 figure "call completion" bill from the tiny little independent local phone company (that the bells had just been gloating over murdering), the bells were back in Washington, and back in court, desperate to break the deal.

    Now, exercise for the reader: where they successul in weaseling out of it? What do you think?
  • That you can buy your fill of rotary phones [] for 5 to 10 dollars US, that means that they were able to actually charge MANY times more per month than the damn things were actually worth.
  • Pathetic (Score:3, Insightful)

    by quintessent ( 197518 ) <my usr name on toofgiB [tod] moc> on Sunday August 11, 2002 @03:20AM (#4049522) Journal
    Another class action settlement. No doubt this will be like most others in which consumers get nothing but the recognition they've been cheated (and maybe a 75 cent check), and a few lawyers get to buy cliff houses in Miami.
  • by guttentag ( 313541 ) on Sunday August 11, 2002 @03:41AM (#4049563) Journal
    Lucent's results for the third quarter ended June 30 include $162 million in costs for its part of the settlement, spokesman John Skalko said. AT&T, the largest U.S. long-distance phone company, is paying $130 million before taxes, spokeswoman Sue Fleming said.
    So how much are our friends at AT&T making in profit on this settlement after taxes? You have to realize that being AT&T, the company will get a special tax break for agreeing to the settlement, another tax break to cover the lost business it expects as a result of the bad PR from this settlement, a tax break for having the word American in its name, a tax break for being AOL, a tax break for not being NTT, plus revenue for providing the months of teleconferencing service that allowed the parties involved to come to a mutually beneficial settlement.

    Note that comparatively tiny Lucent actually had to pay money in its part of the settlement.

  • I just can't understand why anyone would want to lease a phone. Now a complex piece of software that is a whole diffrent story. It make sense to lease an operating system or an office suite.

    I don't suppose this could be setting a precident or anything?
  • stealing mp3's.

  • by Trekologer ( 86619 ) <adb@trekologer.G ... minus herbivore> on Sunday August 11, 2002 @05:11AM (#4049721) Homepage
    Ok, here's what this is about. Some people just realized that they have been paying the phone company every month to lease telephone equipment. Over the years, they've paid many times what the phone itself was really worth.


    If you've walked into a store anytime in the last 20 years, you would find that you can, in fact, purchase your very own telephone and don't need to continue to rent one from the phone company. And even if you continued to rent the telephone, you're not just renting the particular phone sitting in your house but also buying protection from that phone breaking. If it does break, the phone company will supply you with another one.

    This should be filed under "Oh, come on!"
    • If it does break, the phone company will supply you with another one.

      Except some of these old phones simply don't break. I find good old AT&T touch phones at thrift stores every now and then. Follow that "timeless rotary traditional" link, and look at that upper-right phone. I've got one of those red desk phones, and the handset wire looks just as gangly as the one in the picture.

      About the only one I have that doesn't work is a rotary phone. It doesn't work because the phone companies don't support rotary any more, except in special cases. And then they charge you less for going to the trouble of providing rotary-only service.

    • I imagine this has gone away by now, but in the Early Days[tm] on some systems, you were not ALLOWED to use your own telephone equipment; you were =forced= to use rented equipment. (Gee, sounds just like some cable modem companies...)

      Sometimes this goes awry the other way. Back in 1975, I was moving on very short notice (to a location with no phone lines at all) and Mountain Bell couldn't get a guy out to disconnect my service in time, so they told me to just cut the line and bring the [rented] phone back at my leisure. So I did, and a week later dragged their phone to the office to return it. The gal peered at the ledger and told me, "But it says here you've already returned it!" Well, if you insist... so I picked up the phone and left. I still have the phone. (It's a rotary that can handle party lines.)

  • Not just US telecoms (Score:4, Interesting)

    by FTL ( 112112 ) <slashdot@neil.f r a s> on Sunday August 11, 2002 @06:09AM (#4049805) Homepage
    Five years ago I was browsing my grandmother's telephone bill, and discovered that Bell Canada was charging her rent on her telephones. Over the past 25 years she had paid $1000 each on three telphones. They were returned that afternoon.

    Next time you see an older telephone in Canada, flip it over and see if it has a "Property of Bell Canada" sticker on the bottom. If it does, warn its owner.

    • As a rule, I ONLY have 'Bell System Property, Not For Sale' phones at home.

      Back when the divestiture happened a lot of customers opted to purchase the equipment.

      There is no phone on the market for a reasonable price that is as durable and well made as a Bell System phone.

      Taking one apart, you'll find different date codes on each component, sometimes with varying dates that span decades. These things were built to last, to standards at least as good as Mil-Spec. Any time a phone was returned to Bell, it was broken up and reassembled from interchangable components.

      The Touch-tone phones of the early 70's aren't even digital. They have inductors and LC oscillators to generate the tuned frequencies.

      They're available for $3-5 at thrift stores, and easily servicible.

      Other than one spread-spectrucm cordless, I won't allow any of the post-breakup crap-phones into my house.
  • by gelfling ( 6534 ) on Sunday August 11, 2002 @08:09AM (#4049962) Homepage Journal
    In 1996 I was the last person in my exchange with rotary service. After years of letters from NYNEX begging me to switch, for a nominal fee of about $4/month they finally cracked and just gave it to me. I refused to pay a charge for a service they had instituted in 1963 and had probably amortized by 33 years later. Apparently it cost them far more than $4/month to maintain the rotary crossbars for only one customer in the exchange.

    It is my one small victory agains the MAN.
    • They dont have to keep a (BIG FREAKIN HONKIN) Crossbar switch to keep your rotary service going. It's an option on digital switches. Williamsport (570-32*) was one of the first towns with a Digital switch, and all of our rotary phones still work.

      On the other hand, almost every phone in the house says "PROPERTY OF BELL TELEPHONE" under it. We've got one wall mount traditional rotary, and about 6 desktop traditional touch tone phones.
  • In the current generation of telephone switch equipment, it's actually more expensive to support rotary dial, because they have to have special equipment to detect those line flashes. I'll bet most of you in US cities are on a line that doesn't support rotary dial at all.

    But you're still paying extra for the phone company to provide a service that costs them less money! It's about time to switch that around and charge rotary customers (aside from grandfathering current customers) extra instead of Touch-Tone users.

    Of course this will never happen, since they already consider it part of the regular phone fee, and writing it up as an extra service is just a billing formality. Rotary customers are so rare these days that they can afford to eat the extra costs.

  • by Jerry ( 6400 ) on Sunday August 11, 2002 @02:49PM (#4051002)
    I purchased a Princess phone for the kitchen at a "Sale" advertized by AT&T at their phone center. I had it for ten years. When I called to cancel my phone service because I was moving the clerk reminded me to return the Princess phone. I was stunned. I told her I payed $30 for it at a phone sale. She said "check the light gray print on the back side of your bill of sale." In print so light you could barely read it was the word 'lease', even though the front was 'sales' invoice. This lawsuite is punishment for that kind of deceptive business practice. They got their phone back. Every component was taken apart and reduced to its minimum parts, all were put into the box, except for the screws and nuts, throughly shaken, and the box was taken to the company, sealed up. I left with my refund, they had "their" phone.

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