C&P cutoffs over long-distance fees probed

December 29, 1990|By Kim Clark

State regulators will be taking a look at whether Chesapeake & Potomac Telephone Co. can continue to cut off local telephone service of customers who have failed to pay their long-distance bills.

Though they have been separate businesses for seven years, C&P, a state-regulated monopoly that provides local telephone services, includes in its monthly bills charges for American Telephone & Telegraph Co., which provides long-distance services, and its competitors.

Though C&P doesn't provide interstate telephone services, it will unplug the local -- as well as long-distance -- service of a customer who might, for example, send checks for the value of the local charges only, letting the long-distance charges build up too high.

In advertisements appearing in Maryland newspapers, the Public Service Commission asks customers interested in the issue to file their names and statements at the commission's East Baltimore Street office by Jan. 29. After that, PSC spokesman Ronald Hawkins said yesterday, the commission will hold hearings and take testimony.

People's Counsel John M. Glynn, the attorney appointed by the governor to represent consumers' interests in regulatory matters, said he is glad the commission is looking into cutoffs, even though most telephone users don't realize there are two sets of charges on their monthly C&P bills.

"Most people don't distinguish the difference" between the two parts of the bill, he said. And, until recently, the telephone companies themselves couldn't separate local and long-distance service, he said.

But the telecommunications industry has developed the ability to cut customers off from long-distance service while maintaining their local service, Mr. Glynn said. (However, long-distance companies cannot yet provide long-distance service without local service, however.)

Now that the telephone companies have the equipment to let customers opt for the ability to make local calls and not long-distance calls, Mr. Glynn said, the state is going to investigate whether they ought to give customers that choice.

"If people knew that paying, say, $16.75 [of a larger local and long-distance combined bill], could preserve their local service while losing their long-distance service, they might choose to do that if they were under financial pressure. Why not let people make that decision?" he asked.

Consumers ought to have the right to keep local service while giving up long-distance service because "telephone service is a fundamental safety issue," Mr. Glynn said. "It is the way people can get hold of the fire or police" departments.

The reason C&P cuts off both services is that it has a contract to bill and collect both sets of charges, said C&P spokesman Al Burman.

C&P actually buys the receivables from the long-distance companies at a slight discount, Mr. Burman explained.

Since C&P is owed the entire amount on the bill, it doesn't differentiate between the amount owed for local and long-distance services in the checks it receives from customers, he said.

If a customer pays only part of a bill, the remaining amount simply rolls over to the next month. It wouldn't be applied to, say, local service only, he said.

"If we had to modify our billing equipment" to give customers the ability to choose paying one portion or another, "we'd be looking at additional costs, and those would be borne by all of our customers," Mr. Burman said.

Besides, C&P believes that it it lacked the ability to cut off local telephone service, customers might be less likely to pay their bills and the long-distance companies would find the current billing arrangement less attractive.

If companies such as AT&T and MCI Telecommunications Inc. pulled out of the agreements, C&P would lose about $12 million a year it makes billing for long-distance services, Mr. Burman said.

C&P will ask the PSC to continue its billing and cutoff arrangements, he said, because the company believes the cutoff programs affect only 1 percent of the company's customers a year, yet save money and keep local telephone rates low for all users.

C&P does not cut off customers who have built up big charges using pay-per-call lines such as those with a 900 area code, he said.

Nor does it cut off the service for customers who dispute a part of a bill, as long as they keep paying the undisputed part of the bill, he said.

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