Through the looking glass: The customer's telephone bill

Here is a funny story. An inventor, 125 years ago, comes up with a brilliant, no-fail, everyone-must-have invention. Within a few years, a company has been created to meet the ever-increasing demand for his product. However, the universal appeal of his work catches the eye of the politicians, and with "a chicken in every pot" mentality, they decide to regulate the invention and force the company to meet government standards instead of customer standards. The marriage of government and company goes on for quite a while, until a customer stands up and says, "Hey! You guys have created a monopoly here!" Backlash starts, and the monopoly crumbles. The customer thinks that maybe he can now influence the invention, but no sooner is regulation dried up than stock market influences descend on the invention. Once again, the customer is shoved aside as the company--now companies--pursue "shareholder value," a nebulous term having very little to do with an actual revenue stream. After developments and time warps, where next-generation technology is out before the first generation has established a market for it, the market corrects itself, leaving this inventor and his company without a market to impress.

Here is an idea. What if this inventor finally decided to focus on his/her customer? Look at customer demands, create a realizable revenue stream, and build a product and service arsenal based on meeting and exceeding customer expectations? In the history of telecom, it would be a fairy tale come true.

In truth, the historic lack of focus on the customer of telecommunications services has bred a whole new industry of telecom analysts and software providers, who insert themselves between the carrier and their customers and attempt to fill the attention and service gap left by preoccupied carrier representatives. Even today, the telecom customer is more likely to have a dedicated salesperson than they are a dedicated billing or service representative. Many carriers maintain a shortsighted approach, focused on getting new customers or new revenue streams rather than keeping current customers happy.

So what do customers want? What are they looking for? Typically, customers want to know that their carriers are the experts in the telecom field and can help them make good communications decisions. They also want to know that the people and 800 numbers that are the face of their carrier are knowledgeable and work with their best interest at heart. Finally, they want to know that everyone behind that person or 800 number can deliver on the promises made to them by their representative.

The promises that a carrier makes to their customer are many. The customer is promised good rates, as telecom is a commodity and pricing is the chief decision component for most consumers. The customer is also promised good service, stressing the reliability and the support available in the event of a crash. Finally, the customer is promised accurate invoicing on the services they agree to use.

This may seem like a no-brainer; yet in most contracts I have seen, billing accuracy is not even expressed. However, billing inaccuracies represent more than 65% of all calls to customer service. I sat through one presentation given by a large carrier where they actually gave themselves a "D" in billing.

The problem stems from the integration involved in most carriers' billing systems. As new technologies are developed and replace others, and plans and promotions are created to target lucrative market segments, the carriers still need to offer their entire line of existing services, and bill those as always. Billing software is patched together for different services, flat-rate and usage-based services, customized contracts and distinct taxing jurisdictions, resulting in a bill that the carriers must generally be sending out on faith.

Still, doesn't the customer have a right to receive an accurate statement and accounting of his/her telephone service? We are not discussing the bargain hunting or the comparison-shopping aspects of telecom purchasing, but once you agree on rates and commitments, shouldn't the bill reflect those agreements? Of course it should. Let's look at some of the main complaints and what could be done to get closer to accuracy on bills and invoices.

• Sales contracts and proposals that do not match the invoice. As a result of the competitive bidding process many large firms engage in, the sales professional is sometimes trapped between the directive to "not lose the business" and the realities of what the billing system can track. In many cases, the carrier rep has not been trained on the ins and outs of the billing system, and they are under the impression that the billing system can reflect any agreement in some specialized field entry. This is not true, and a few hours of training can help the representative "represent" promotions and opportunities more accurately.

• Unorthodox increments of use. Many customers complain because although they were sold what they thought was a rate per minute, what they found out was the rate was quoted in some other increment, like a Time of Use, or "TOU." In other words, a customer is comparing a $.05 per minute rate with a $.048 per TOU rate, which depends on how much time that TOU represents. If it is a minute or more, than the customer wins, but if it is .5 of a minute, then the customer is actually getting a 9.6-cents-per-minute rate. These billing conventions are still very common, and carriers need to familiarize themselves with who uses what increments in order to competitively bid, much less bill favorably for the customer. Another increment issue arises in the wireless arena, where prorating the minutes can penalize a customer who wants to change their PCS or cellular access plan to reflect more or less usage. For example, a customer changing from 1000 minutes to 1500 minutes mid-May would only get 750 minutes to use in May vs. the 1000 they were used to getting. Combine that with the double billing convention they would see on their next bill (billed for both May and June), and the whole process seems unfair.

• Unauthorized Service charges appearing on the bill. Last summer, the big charge was router charges--whereby DSL carriers were trying to recoup some of their losses by applying new and uncontracted charges to the bill. This year, it is a myriad of things, including joint user fees, line retainer fees, and others that appear mainly on reseller bills or those of facility-based CLECs. Because they rarely have a significant impact on the bill overall, there are generally ignored, sometimes going unnoticed for years. While carriers can recover many costs and charge very liberally in our deregulated environment, I believe the customers would like to have prior knowledge of those charges. One carrier negotiating a million-dollar-a-year contract decided to leave $3600 a month in toll-free line access charges as a look-up on the tariff, which a court of law upheld as against the spirit of the contract. That customer is now saving $3600 per month, and that carrier is probably going to put line charges in their next contract.

• Tax Exemption concerns. In the natural world, a tax-exempt organization is one that does good in the world--churches, hospitals, schools--without making a profit. However, in Telecom Wonderland, these criteria just aren't enough. To avoid telecom excises taxes you need to be a school or a hospital, with registered staff, and a curriculum to avoid telecom excise taxes. Many states will view your 501(c) 3 status as enough to get you out of state excise taxes, and some will allow you to avoid local municipality taxes as well. In this budget crunch, don't expect too much from government in terms of free rides. Even if you are tax exempt, though, most customers need to check their bills to make sure that their exemptions are properly applied each and every month. In many cases, many of the surcharges and taxes are just kept by the local phone company, so there is not always an oversight function to make sure that taxes are being collected fairly.

• Universal Service Fund. The Universal Service Fund seems to be moving in the direction of reform, which is great. However, the new laws requiring that the USF charges be calculable by the average person seem to be an ambitious request. As the percentage factor changes quarterly, the carriers are not required to let their customers know what the new percentage is, and as I mentioned, most customers would like to be able to trust their carriers as knowledgeable on telecom topics. And the application of the USF to interstate and international revenues makes the local carrier's contribution requirement difficult to estimate. If a carrier only carries local traffic for you, how can you calculate 9.1% of nothing? Also, the subject of an administration fee for tax collection seems to be hot button, since it is unclear how a new line item can protect the end user.

• IntraCarrier Disconnects. For many consumers, the sheer volume of billing and line items on their invoices is a nightmare. On a telecom bill I just saw, the line charges are listed in three separate sections of the bill based on address, type of charge, and in conjunction with applicable usage. One carrier may issue two or three different bills to the same customer for data and voice, multiplying the billing charges, the CD ROM vs. paper charges, and occasionally ending up with information discrepancies between the bills, including contract terms, tax exemptions and service disconnects. A customer that purchased a smaller company began to switch the merged company's services over to their contracted telecom carrier. It took more than a year and $500,000 of overbilling credits to get the second company's services to reflect the terms negotiated by the purchasing company--and a year later, the bills still aren't accurate.

Despite best efforts, the billing problems aren't going away. But carriers can do a lot to mitigate the dissatisfaction they cause.

• Review customer bills with customer when received. I am always impressed when the sales and/or service team comes out to visit a new client with their first invoice. Certainly, when we change a service provider for a customer, we make sure we go over the invoice with the customer with a fine toothcomb. We look at rates, line charges, tax information, service and billing address information, and proportionate usage. The hour or so we may spend on bill review generally results in months of palpable customer satisfaction.

• Carriers need to think in terms of combining billing structures, sharing information about customers across all the billing conventions, so that United Way, for example, is tax exempt across every system. CD and Web-based billing should offer audit trails to verify that charges appear once and are carried accurately through the rest of the invoice. A databank of customer information would be a great complement to the product and service database that currently fills the billing system.

• Make rate review guarantees. So many carriers find stewardship clauses, or rate review guarantees, unconscionable, as if there are winners and losers in a contract negotiation. But smart people know that if the customer isn't happy, no one wins and the customer will change. We negotiate contracts for our customers that promise a review every 12 to 18 months to ensure that rates are still reasonable. Even if rates have gone up, the customer should get a chance to prove that-it will make them more satisfied with their current terms.

• Accountability is not dead in this industry. Carriers need to be able to accept responsibility for accounting and billing inaccuracies, and customers need to give them the chance to fix it. But one chance should be enough. The current trend of dragging customer service and credit issues out six, eight or even 20 months in the hopes that you leave your job before you actually need to give your customer a credit is a little pessimistic. Give timelines for review and solution to problems and stick to them.

Purdue University completed a study last year stating that customers who experience good reliability on products and services will repeat purchase 78% of the time, but customers who have had problems with goods and services yet get good results with customer service will repeat purchase 89% of the time. That is quite a fact. Through this looking glass, where telecom carriers need to ensure revenue streams in uncertain times, good customer accountability is money you can take to the bank.

Missy Mastel, CPA, is the President/ Founder of Mass Tel Communications Inc., a telecom outsourcing audit company headquartered in San Francisco. For information, go to www.masstel.com.