Ameritech Catches Political Fire From Competitors

Open up this month’s Ameritech bill and you may find a surprise. The bill charges you a late fee, a little noticed penalty it added back in January 1997. But since Ameritech bills ahead for your fixed services, the late fee actually kicks in a week or more before you’ve gotten the full month’s service. It is a small thing, but it may reveal much about the politically charged telecommunications industry in Wisconsin.

Steve Hiniker, head of the Citizens Utility Board, says charging a late fee on services that haven’t yet been provided is “absolutely asinine. It’s absurd. It’s a little bit of a display of how the Public Service Commission will bend over for the industry it regulates.”

But some people say Hiniker is too hard on Ameritech and is allied with the company’s competitors, including AT&T. These issues may play out in the Telecommunications Taskforce established by Assembly Speaker Scott Jensen (R-Waukesha), which could take on a long list of issues related to the industry.

Any new laws in this area could have an impact on the Public Service Commission, which has regulatory powers over the telecommunications industry. Hiniker says the PSC “is heavily influenced by Ameritech.” Speaking of the company’s late fee, he says, “This advance payment is one of the things we’re trying to stop. We could probably do a class action suit.”

The late fee can be as small as 30 cents, depending on the amount of your residential monthly bill, but if a good chunk of Ameritech’s 1.4 million residential customers end up paying late, it could amount to “millions,” Hiniker says. Ameritech also charges its 760,000 business lines a late fee before these customers have gotten their full month of service.

Back in 1998, PSC spokesperson Mary Pat Lytle told me the commission tolerated this because “of a fluke in their system that they [Ameritech] can’t correct.” But couldn’t Ameritech simply change the date when the late fee kicks in?

Annemarie Newman, the PSC’s current spokesperson says Ameritech’s practice is “legally permissible” and “the main reason that is was implemented this way was that it was administratively simpler to assess the late fee on the entire bill.”

So because it’s administratively simpler for Ameritech, we have to pay interest (which is essentially what a late fee is) on service we haven’t received? Newman says the “there are some draft rules that are pending at the PSC” regarding the late fee, but why has the commission waited more than four years to address this situation?

Hiniker says the PSC’s laissez faire attitude toward Ameritech has resulted in the company posting double-digit profits since the state deregulated the industry in 1994. Indeed, in 1998, news stories hailed the fact that the company had posted 18 straight quarters of double-digit profits. Ameritech was bought out by SBC, and is now part of that company, but Hiniker says the big profits have continued.

Mark Bacurin, a telecommunications industry analyst for Robert W. Baird & Co., says that since the purchase by SBC, Ameritech “is still very profitable, compared to other telecommunications companies.”

Small competitors of Ameritech want to cut into its market, as does AT&T. Meanwhile, Ameritech is attempting to get into the long distance carrier business, which international giant AT&T would like to prevent.

Hiniker refers to SBC/Ameritech as a “mega-monopoly,” but Jeff Bentoff, a spokesperson for Ameritech says, “our competitors now have 340,000 access lines in Wisconsin,” which are mostly for business customers.

Bacurin agrees Ameritech is getting considerable competition with business customers, but says “on the residential side its virtually zero.”

Hiniker charges that Ameritech has seen customer complaints skyrocket by 700 percent since deregulation, but there is evidence AT&T is catching up. Ameritech had 1,743 complaints in the first half of 2000, compared to 666 for AT&T. But Hiniker hasn’t offered any criticism from AT&T. A story in the Milwaukee Journal Sentinel noted that Hiniker is getting funding from a coalition that includes AT&T, Sprint and business groups like the Merchants Federation.

It is likely that such coalitions may be pitted against Ameritech in the telecommunications task force. As to who will watch out for the consumer on this task force, that remains to be seen. Hiniker says his group should be on the task force, but Ameritech clearly sees him as too influenced by its competitors.

But there is clearly an issue of protecting the consumer when it comes to local telephone service. Even if the PSC, for instance, decided to require a change in Ameritech’s late fee, the company could simply charge more for other services to make up the difference. David Albino, the PSC’s administrator of telecommunications, says, “The only things we can oversee are the charges for local service. The vertical features like call waiting, voice mail, those are all unregulated. The vertical features are sometimes most of the bill.”

Theoretically, a consumer might look to a competitor for such services, but as Albino notes, “there are areas of the state where there is no competitor to switch to.”

Perhaps that is an issue that Rep. Marlin Schneider (D-Wisconsin Rapids) will want to consider. Schneider, Jensen’s office has announced, will replace Rep. Jon Richards (D-Milwaukee), who withdrew from the task force after critic sizing its lack of consumer representation.

King of a Controversy

The Milwaukee Journal Sentinel offered an odd story covering Congressman Ron Kind‘s announcement that he will not run for governor. The article by Steve Walters seemed to suggest Kind was so well liked that he could take his time deciding to run for governor. Kind, who cited the crisis in international affairs as his reason for not running, might have been an attractive candidate, but it’s hard to see how his strategy of concentrating on western Wisconsin would have gained him a victory: the La Crosse, Eau Claire and Wausau markets only account for 17 percent of the votes.

If Kathleen Falk‘s entrance into the race seemed like a help to Tom Barrett, leaving Falk and Jim Doyle to fight over Dane County, then Kind’s withdrawal looks like a boon to Doyle. At this point, Doyle is the only well-known candidate in western Wisconsin. The recent poll commissioned by the Wisconsin Policy Research Institute shows only 10% of people in the La Crosse/Eau Claire area knew enough about Barrett to have an opinion about him. By contrast, 52% have an opinion about Doyle, the same rating as Gov. Scott McCallum.

Barrett spokesperson Joel Brennan naturally rejects the idea that his man will be weak out west, noting that Barrett has been careful not to spend too much time in the area. “He was very cognizant of not stepping on Ron’s toes.”

Barrett is clearly hoping for an endorsement from his fellow congressman Kind. In the meantime, the focus of America on the terrorist crisis may gain Barrett more attention in the media, which could help offset Doyle’s current advantage. All of which is to say it’s a damned interesting race.

This article was originally published by Milwaukee World.