SBC Communications Inc.'s Pacific Bell unit has agreed to pay California a $27 million fine to end a lawsuit filed by consumers over billing errors for its digital subscriber line service.
United Consumer Action Network of San Diego sued Pac Bell for faulty service on behalf of thousands of the telco's estimated 800,000 customers. The dispute was turned over to the state's Public Utilities Commission, which helped negotiate the settlement.
Like the cable industry, which experienced service disruptions when it had to rapidly ramp up alternative infrastructure following the collapse of the @Home Corp. network, Pacific Bell's problems are linked to the company's decision to spin off its DSL business.
A different unit, Advanced Solutions Inc. was created two years ago after SBC acquired Pac Bell. ASI hired a third-party billing company to handle its DSL accounts, according to the settlement document, but that vendor did not have access to either the Pac Bell or ASI back-office database.
According to complaints made to UCAN and the PUC, customers said they were billed for DSL services they never ordered or received, or for service they ordered but didn't receive. Others continued to get bills after they terminated service.
Customers who signed up for free, promotional rates also found themselves receiving a wave of bills. When they cancelled, they were hit with unexplained termination fees, according to the settlement.
They were also charged late fees on bills for service they didn't receive or threatened with termination of their basic telephone service if failed to pay, according to the settlement.
The consumer-affairs branch of the PUC received 863 complaints between January 2001 and April of this year. UCAN contended that the level of complaints was higher than that and, initially, ASI claimed that it had only 10 complaints during the same period.
But when ASI was ordered to turn over documents, the agency found evidence of more than 5,000 complaints.
Pacific Bell has made improvements to service, establishing a call center with 100 representatives to answer queries from its own dial-up Internet customers, as well as ASI's high-speed subscribers, according to the settlement.
DSL customers will now have their new orders turned over to managers who will verify PC compatibility, discuss bill due dates, explain early termination policies and determine if the new subscriber will use a self-installation kit or expect a technician visit.
The state expects the units to again divide the billing functions by 2004.
Pac Bell also must offer customers a full month's service credit, or $25, for future billing errors.
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