A clean envelope, New entrants seek fair rules in the billing process

Setting up effective billing processes is emerging as a critical competitive issue in the move to deregulate the local loop, a public hearing at the Federal Communications Commission revealed last week. Indeed, federal supervision may be needed to guarantee fair billing practices for everyone, including consumers, a number of panelists said.

"[Local exchange carrier] billing is very important to the well-being of a lot of carriers," said Ronald Evans, vice president of operations for Van Nuys, Calif.-based OAN Services Inc., a third-party billing company. "A lot of our customers are small, new entrants that would suffer greatly if billing were to double or triple in cost.

One Rochester, N.Y.-based competitive carrier filed for bankruptcy because, among other things, it could not sort out important billing issues, Evans said. The company, which Evans would not name, failed to find a cost-effective method for billing casual calls such as collect, card or 10XXX calls.

"Incumbent LECs do all the billing now, and that could give them a significant competitive advantage," said Evans. This is especially true given that consumer surveys show that customers are most dissatisfied with getting multiple telephone bills.

"We just don't have the infrastructure that LECs have today, but we are experimenting with [billing] in four communities," said E.E. Estey, vice president of government affairs for AT&T.

Branding and identity are other issues at stake in the billing process. The billing envelope is, after all, the most frequent contact between carriers and customers.

"As both local and long-distance become a commodity, there is less to distinguish us," said Gregg Sayre, general attorney for Frontier Corp.

That gives incumbent LECs a distinct competitive advantage, at least early in the move to introduce competition to the local loop. While many states appear to have taken steps to prohibit incumbent LECs from cutting sweetheart deals that give preferential pricing to some carriers but make them unavailable to others, panelists agreed that the industry needs to further define business conventions across the country.

Citing the possible disappearance of popular consumer services, MCI has filed a petition asking the FCC to develop minimal regulations for billing.

"The troubling aspect is that there are no federal rules concerning billing and collections," said AT&T's Estey. "Maybe some rules are necessary for competition in this area to develop.

Raymond Lawton, associate director for telecommunications at the National Regulatory Research Institute in Columbus, Ohio, presented troublesome data at the FCC hearing (see figure).

NRRI research shows that 23.4% of business/non-residential and 20.2% of residential customers reported receiving a bill with an error in the past 12 months.

"Customers have a very simplistic view of how they should be paying their telephone bill," said Evans. "You need an envelope that is very clean."