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from: MultiChannel News

Word to Locals: Set Service Standards
Competition Won’t Cure All, Advisers Tell Town Officials

By Linda Haugsted 4/9/2007

Video competition is not going to solve all customer-service problems, so cities and counties still need to craft and enforce local guidelines, attorneys advising the regulators said.

Those standards could be most successful if written to guide all service providers in town, not just cable operators, the attorneys advised. That would mean removing customer-service protections from franchising agreements and crafting them into municipal ordinances. The language in these documents should allow for frequent updates to reflect current working conditions.

TELCO FACTOR

Lawyers, participating in an April 2 telephone conference hosted by the National Association of Telecommunications Officers and Advisors, said the entry into the market of such cable competitors as Verizon Communications and AT&T could create new problem areas.

Nick Miller of the Washington, D.C., firm Miller & Van Eaton suggested providers might beef up customer service to new customers while giving short shrift to longtime ones who don’t generate revenue, such as consumers who call to downgrade or to cancel service. Fewer workers might staff desks handling disconnections, leading to long on-hold times, he said.

Telephone companies’ entry into the video-delivery business will not benefit all consumers, Miller added, noting that none of the state-franchising bills passed to date require Verizon or AT&T to serve an entire state.

Cities should be on the lookout for cable providers that use markets in which they remain the single terrestrial provider as “cash cows,” helping to subsidize areas in which they compete head-to-head with telephone providers, Miller added. He predicted, for example, that cable customers in Michigan’s Upper Peninsula will be served by fewer customer-service representatives per capita than will serve competitive Detroit and its suburbs.

With cable and telcos both offering phone service, providers must be monitored to ward off the consumer issues that have plagued the competitive local-exchange carrier market: cramming, slamming and long-term contracts with onerous cancellation provisions, he added.

In some local franchises, AT&T and Verizon have agreed to some consumer standards, according to Miller. In operating agreements with Fairfax County (AT&T) and Montgomery County, Md. (Verizon), the new providers agreed to such terms as 30-second telephone response times; notifying consumers 60 days before rates are raised; and customer credits for outages of 24 hours or more.

Tim Lay of law firm Spiegel and MacDiarmid noted the federal Cable Act assigns customer-service regulatory rights to state and local governments.

The Federal Communications Commission has said it can’t prohibit local service standards that are more stringent than those in the federal act. But he anticipates industry arguments against local standards in video-competition dockets on the basis that the marketplace “will take care of it” and because it costs money to comply with local rules.
SEATTLE PARADIGM

Consumer-protection rules installed by Seattle were offered as an example of strong municipal oversight.

In February 1999, that community adopted a “cable consumer bill of rights” specifying that providers Comcast and Millennium Digital Media would give courteous service and meet specified service targets. Examples: standard installation requests must be fulfilled within seven days, service must be provided in four-hour service blocks and there must be a local office for every 75,000 customers served.

Seattle’s bill of rights also specifies penalties — such as a $5 consumer credit if the customer-service representative is not courteous or a $10 credit if the technician does not arrive during the specified service window.

The standards also require providers to pay 50 cents per customer into a trust fund. If a customer and a company are unable to reach an accord on a subscriber complaint, the city may review the dispute and, if Seattle officials agree with the consumer, they compensate the subscriber with money from that fund.

Jill Novik, who supervises compliance with the bill of rights, said since the standards were adopted, the city has paid out only one claim to a Comcast customer. There have been several small claims paid to Millennium Digital customers, she said.

The bill of rights is “one of the things we do for citizens that they really like,” according to Novik.
WATCH STATE LAWS

But new state-franchising laws will be a challenge for local regulators if they don’t specifically grant customer-service oversight to municipalities.

For instance, the new Indiana state law is silent on the role of municipalities, one conference participant noted.

The attorneys suggested that community officials research state laws to determine whether they can use their general police powers to regulate customer service.

Another option is the passage of general customer-service regulations that address all types of service providers, the attorneys said.