GREEN WITH ENNUI: THE ENVIRONMENT'S LACKLUSTER APPEAL IN PROMOTING ELECTRONIC BILLING

Mention the environment and instantly hackles rise. But like it or not, the environmental impact of electronic billing is potentially one of the biggest upsides to more widespread adoption of the technology. It's not the biggest upside in most people's eyes, however; convenience and cost-savings rate much higher. In fact, when it comes to the environment, telcos take the stance many industries have when considering certain environmental impacts: Let the customer decide.

Collectively, local service providers in the U.S. bill 97 million households each month. At an average four pages per bill, that comes to approximately 388 million sheets of paper. To produce that much paper, mills have to process approximately 33,756 trees, according to a formula used by AT&T. Annually, more than 405,000 trees must be felled to let consumers know how much they owe their local phone company.

And that's just a drop in the bucket. This figure doesn't take into account the envelope, the return envelope or the check sent in response. It doesn't take into account the millions of small to medium-sized businesses whose bills average almost twice as many pages. It doesn't take into account long-distance service, which often gets billed separately, or wireless service.

So far, the customer appears either ill informed or unconcerned about the environmental impact of doing business the old fashioned way. And service providers feel it is not their place to drive the point home.

“If some group or organization wanted to do something high-profile and powerful to encourage customers to take advantage of electronic billing because it helps the environment, we would embrace that,” said Maria Malicka, executive director of channel management and e-commerce development at Verizon Communications. “But we would rather this be driven by the customer than by us.”

Service providers also are concerned that if too strong a push came from them touting the environmental benefits of electronic billing, customers might be skeptical, surmising intuitively — and correctly — that it is much cheaper for the phone company to get them to conduct business electronically, thereby feeling manipulated.

“You want customers to do it because they understand and are happy in their decision, not because they are forced to do it,” said Brad Allenby, vice president of environmental health and safety at AT&T.

As voracious as telecom's appetite is for trees, it doesn't account for the majority of the 30 million acres forested each year in the U.S. Paper itself accounts for less than half of the country's tree consumption. And telecom billing doesn't begin to rival the 90 billion pieces of commercial junk mail delivered annually.

This could explain why no environmental groups have made an issue of it, why so-called tree huggers are not standing outside the offices of the RBOCs demanding a solution, and why no green-thinking politician is authoring bills requiring a shift to electronic billing. But it doesn't explain why consumers don't see it as a way to do their part.

One reason may be that they are lulled into a false sense of security by recycling (see a related sidebar on page 32). Yet small changes are afoot that may start tipping the balance in favor of making electronic billing and other environmentally friendly practices the rule rather than the exception.

If one good thing comes out of the corporate scandals era, it may be the re-awakening of the socially responsible investor. Social investment companies such as Green Century Funds in Boston provide investment opportunities to investors who want to put their money where their conscience is — into what they consider socially responsible corporations.

Because everyone's idea of social responsibility differs, mutual funds and other investments are set up with screens for various corporate behaviors. Investors decide whether to invest based on a range of screens including alcohol, guns, gambling, human rights, products and services, and environmental performance. The environment ranks third or fourth in importance to investors among the various funds, according to Todd Larsen, spokesman for the Social Investment Forum, a trade association for socially responsible investment professionals and organizations. However, it ranks highest in the number of funds that screen for it.

Over the last two years, the assets controlled by socially screened investment portfolios rose 35%. Such investments now account for more than $2 trillion. And lest one think investors will lose their conscience in a tough market, socially screened portfolios grew 1.5 times the rate of other investment portfolios between 1999 and 2001, according to the SIF.

“Increasingly, investors are showing that these issues matter to them and are sending a message to companies that shareholders want these companies to be responsible whether it is on the side of corporate governance or social and environmental issues,” Larsen said.

In addition to screening companies, social investors also exercise their influence through shareholder advocacy and community investing, and they are beginning to take notice of telecom.

“Companies that have moved to reduce their paper use in many ways, including electronic billing, would definitely be a positive in our eyes,” said Michael Leone, administrative director of capital management at Green Century.

One way service providers are making progress is by participating in groups such as the Global e-Sustainability Initiative. GeSI is a group of technology companies, including AT&T, Bell Canada, BT, Ericsson, Deutsche Telekom and Telcordia Technologies, that will help influence policy and inform the public of its voluntary role in lowering the effect of development and promoting technology that fosters sustainable development. Also, more service providers are responding to an initiative by the Global Resource Institute, a part of the United Nations environmental program, to comply with its voluntary sustainability reporting guidelines. GRI recently completed its working draft of a telecommunications sector supplement to the guidelines.

Companies such as edocs, a provider of electronic billing systems out of Massachusetts, wouldn't mind seeing more movement in the area of e-billing adoption. But even they don't see the environment as a way to promote it. “It's not the lead message. It is inferred for people who care about it. They are making that connection all be themselves,” said Tim Walsh, director of corporate communications at edocs. “But unless you are EarthLink, you aren't wrapping your brand around it.”

Green marketing campaigns — those focused on a product's or company's positive environmental impact — have met with mixed results, said Jacquelyn Ottman, author of “Green Marketing: Challenges and Opportunities for the New Marketing Age,” as well as founder and chief eco-innovator at J. Ottman Consulting.

Ottman's firm helps companies develop marketing and promotional campaigns to help move their customers to more environmentally friendly business practices. She said there is no reason why a company can't help consumers realize the impact they can have on the environment, but they have to be careful. Many products and services have come and gone despite their eco-friendly claims. So far service providers have been practicing what Ottman preaches: balance environmental issues with primary customer needs, or be forever relegated to the green graveyard.

She said there are rules to green marketing. They include making sure your customers are truly concerned about the issue your product addresses (the case has not been made that the American consumer cares much about deforestation), that your product makes them feel like they are making a difference and that they believe your claims. “Consumers can be pretty skeptical, especially when they know it is in a company's interest to promote the environment,” Ottman said.

Without such promotion, however, adoption rates of electronic billing are likely to remain mired in the single digits for quite some time. And service providers won't realize any of the potential cost savings associated with electronic billing while supporting both electronic and paper systems.

Only about 1 million of AT&T's 55 million residential customers use the e-billing option. At a cost of $6 to $7 to produce a paper bill vs. the 3¢ to 5¢ it costs to produce an e-bill, the company is missing out on significant cost benefits. And AT&T isn't alone.

Verizon sends about 30 million bills to residential and small to medium-sized business customers each month, but only 1.5% make online payments. Worse yet, only one-tenth of 1% of those customers suppress their paper bills.

With only a 10% jump in the adoption rate with suppressed paper billing, these service providers could save approximately $350 million per month combined. “You look at that discrepancy and have to ask, ‘Why isn't everybody in the industry on e-billing?’ But the answer is, there are too many customers that just don't like it,” Allenby said.

Consumers didn't like be told to switch to VHS or compact discs either, but they did. Still, service providers are not willing to risk alienating customers. “Our job is to make our customers happy. If they want something like this, we will deliver,” Malicka said.

And a 10% jump — even a 30% jump — would not require any increase in the number of people connected to the Internet. According to Harris Interactive, as of March of last year, 137 million, or 66%, of adults in the U.S. were online. Better yet, 51% of those online adults are women, the majority of whom (56%) pay the bills.

In the meantime AT&T and others are looking for other environmentally friendly options that save money. One is tele-work. Allenby said AT&T saves approximately $25 million annually in real estate costs, an additional $10 million in retention and recruitment costs, and generates $65 million in increased productivity thanks to its tele-work policies. Because this benefits the company, the employee and society as a whole, it qualifies as a triple bottom-line technology, a requirement for adopting any new policy.

E-billing also qualifies as a triple bottom-line technology, but as a hardcore technology solution rather than an environmental solution it has not caught the eye of environmental groups, Allenby said. But that doesn't mean it shouldn't be addressed.

“If you have a slam dunk, go for it — even if it is a relatively small part of a larger issue,” he said. “The key for telecom is we have opportunities to leverage significant environmental and social benefits across the economy as a whole, and that kind of power is generally not understood by the traditional environmental analysis.”

And not, evidently, by the telecom consumer.

PAPER TRAIL
Approximately 23,280 tons of paper are used annually just to bill U.S. residential phone users for single lines of service. The environmental benefit derived from using 50% recycled paper shows why the focus should be on reduction as well as recycling.
Environmental impact	Virgin paper	50% recycled	Environmental benefit
ENERGY USAGE BTUs
Total	895,437,264	699,811,932	21.84% better
Fossil fuel derived	328,150,224	362,968,956	10.61% worse
ATMOSPHERIC EMISSIONS (IN LBs)
Net greenhouse gases (CO2 equivalents)	132,223,416	107,807,351.9	18.46% better
Nitrogen oxides	433,008	384,120	11.29% better
Hazardous air pollutants	48,888	26,772	45.23% better
SOLID WASTE (IN LBs)	52,061,064	39,471,240	24.18% better
1. Source for calculation: Office of the Federal Environmental Executive
2. Source for tons of paper used: the number of four-page bills needed for a 95% penetration rate of local phone service for approximately 102 million U.S. households at 5 lbs per 500 sheets

Recycled paper is not the panacea a lot of people think, according to Brad Allenby, vice president of environmental health and safety at AT&T. “We use recycled paper because our customers prefer it, but from a purely environmental perspective, it may not be the best choice.”

Recycling requires more fossil fuel to produce than virgin paper, including the energy to collect and transport the product around the country. And despite all the recycling, paper comprises 40% of U.S. municipal solid waste, according to the Resource Conservation Alliance in Washington, D.C.

Recycling is one of those immutable arguments in which sparring between environmentalists and their skeptics often ends with a “no decision” because many environmental issues are just too complex to be solved with two-sided arguments. “The best way to avoid getting trapped in the dilemma about recycled paper is simply to avoid the use of paper all together,” Allenby said.

No one, including Allenby, expects that to happen anytime soon. Service providers are reluctant to badger, cajole or force their customers into thinking green, and customers are too set in their ways or lack the confidence in e-commerce to make a change.