Illinois commission tells Ameritech to lower termination penalties

The Illinois Commerce Commission (ICC) has ordered SBC subsidiary Ameritech to lower the penalties it levies upon business customers that opt for early termination of the company’s ValueLink service, calling those penalties “unconscionable, unjust and unreasonable.”

The order came nearly two years after a complaint filed by the Association of Communication Enterprises (ASCENT)--a trade group that represents resellers of telecom services--that accused Ameritech of violating the Illinois Public Utility Act by charging exorbitant termination penalties for the purpose of “locking in” customers. ASCENT had asked the ICC to reduce the penalties to “a just and reasonable level” or eliminate them from the ValueLink tariffs, according to the order issued on Jan. 4.

While it acknowledged that Ameritech had shown “a willingness to accede” by agreeing to refrain from enforcing termination charges in certain instances, the ICC agreed that the “intention and primary effect” of the ValueLink termination penalties, due to their size, was to “lock customers away from emerging competition.”

Dooming Ameritech was its inconsistency in how it arrived at the penalties.

“Because Ameritech uses a variety of schemes for determining its termination penalties, even for plans including the same services, it is unlikely that all--or perhaps any--of those penalties have been designed to recover actual damages,” said the commission in its order.

The ICC dismissed an ASCENT allegation that Ameritech degraded the services it provided to competitive carriers for resale in order to get customers to switch back to Ameritech. It also acknowledged that competitive carriers also might be imposing termination charges for the “primary purpose of preventing the exercise of customer choice.”

While it rejected Ameritech’s assertion that it would be “discriminatory and anti-competitive” to limit Ameritech’s termination penalties without imposing comparable limits on competitive carriers, the commission said it had sufficient reason to begin investigating CLEC practices concerning termination fees.

“We are pleased the commission recognized that this is not an SBC/Ameritech-only issue and that they need to look at practices across the industry,” said an Ameritech spokesman.