from: LA Times [1]

Time Warner customers misled by AT&T ad
October 17 2007

David Lazarus:
Consumer Confidential

An ad from AT&T that ran the other day in these pages and elsewhere warned that some Time Warner Cable customers are in danger of losing phone service as the cable giant makes some technical changes.

The ad -- which sneeringly declared, "You got cabled" -- was certainly attention-getting.

It also was apparently wrong, and at least one state regulator is mighty cheesed that AT&T is spreading what he called false information among consumers.

"I'm very disappointed in AT&T," Timothy Simon, a member of the California Public Utilities Commission, told me. "The content of the advertisement is not true."

He said he was "not ruling out the potential of sanctions" against AT&T, possibly a fine for making false claims.

Gordon Diamond, an AT&T spokesman, acknowledged by e-mail that the ad contained incorrect information, but he didn't back down from the contention that some Time Warner phone customers might lose dial tones.

"We have no plans to run the ad again," Diamond said.

At first glance, this would seem to be little more than an isolated episode involving a single company making dubious claims. But it's more than that.

Although industry members routinely insist that the telecom market is a hotbed of pro-consumer competition, the reality is that it's little more than an oligopoly in which a handful of major players duke it out for dominance.

And since those players don't want to do anything to jeopardize profits, they seldom compete on either price or quality of service. Instead, they rely primarily on propaganda -- and occasionally misinformation -- to win customers.

"AT&T's 'dead phone lines' claim appears to be dead wrong, but that's not a huge surprise," said Steve Blackledge, senior policy analyst for the California Public Interest Research Group. "When companies don't compete on price, they compete with scare tactics."

A little history: Time Warner and other cable companies once relied on phone companies' systems for their voice offerings. Most are now switching to digital, Internet-based technology that allows them to bypass the phone companies and use their own cable networks instead.

The move allows cable providers to compete more aggressively with phone companies for customers. Time Warner, for example, is offering 12 months of bundled TV, Internet and phone service for $89.85 a month.

AT&T offers a comparable bundle for $99.98. Verizon's TV-Net-phone package runs $94.99 monthly.

Both phone and cable companies have been working overtime to convince consumers that theirs is the only bundle worth considering.

The stakes are high. Telecom providers know that the more services a customer accepts, the less likely that customer will be to take his or her business elsewhere.

Many people see it as just too much hassle to disconnect a household's TV, Internet and phone services and start again with a new provider, even when a competitor offers a lower price.

After telling Time Warner customers they got cabled, AT&T's ad went on to say:

"Hey, it happens. Come October 18, Time Warner Cable is turning off their circuit-switched phone service, which means some customers may be without a dial tone. AT&T can change all that for you through our reliable service."

The ad went on to boast that AT&T's land lines are "99.999% reliable" and come with "great rates and no gimmicks -- just solid phone service you can trust."

The land lines may be trustworthy, but the company's ad missed the target.

"It was factually incorrect and unnecessarily alarmed customers about a problem that doesn't exist," said Patricia Rockenwagner, a Time Warner spokeswoman. "Customers will not lose dial tone."

She said Time Warner phone customers who were not already on the company's digital network would have to be proactive in requesting that their numbers be switched from the older, phone-circuit-based system.

Those who do not make this request, Rockenwagner said, will have their phone service transferred either to the phone company of their choice or to one of Time Warner's choosing.

"No customer is in any danger of losing dial tone at any time," she said.

AT&T's Diamond said the company's ad was incorrect but only because it said Time Warner would be turning off its phone-circuit-based system Oct. 18. He said AT&T's advertising department hadn't noticed that Time Warner had sought an extension of this deadline from state authorities.

Diamond insisted that at least some Time Warner customers were in danger of having their phones go dead.

"The reality is that this process is complicated and certainly, in the past, there have been instances of some customers losing service, or having phone problems, as companies migrate to different technologies or make changes in their phone networks," he said.

The PUC's Simon countered that AT&T got it wrong on both counts: the date and the prospect of people's phone service being cut off.

"Time Warner will not be turning off its switches on Oct. 18 or any other date until the California Public Utilities Commission approves of the action," he said, adding that this wouldn't happen until consumers were guaranteed "a seamless transition in phone service."

One of his main concerns, Simon said, is that Time Warner phone customers have been left with the impression that they could suddenly lose access to 911 emergency calls.

"It's unfair to consumers for AT&T to create a scenario that's not accurate," he said. "There will be no service disconnections."

Told of Simon's comments, AT&T's Diamond stuck to his guns.

"While all parties involved are working to ensure the transition is a smooth one, the reality is there is a chance that some could encounter problems during the process," he said.

There. You got AT&T'd.