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Points of No Return for PacBell

July 12, 1996|KATHY M. KRISTOF

Girding for competition in the previously monopolistic local telephone market, Pacific Bell launched a program in April that will pay points based on phone use, much like credit card companies give points and frequent flier miles to consumers who "charge it." Pacific Bell points will be redeemable for prizes such as prepaid phone cards and free travel.

But now, thanks to an adverse decision in a suit filed by long-distance carriers, Pacific Bell, which has the largest number of local-service customers in the state, is scrambling to revamp its fledgling program.

At the heart of the dispute is Pacific Bell's promise to pay points for all the charges on your telephone bill, no matter if they were rung up on Pacific Bell's dime or on AT&T, Sprint, MCI or other carriers that bill customers through Pacific Bell.

AT&T and other big long-distance companies sued, charging that Pacific Bell's program would invade the privacy of customers whose long-distance charge information would be "shared" not only with the Pacific Bell Awards program but with other PacBell divisions that might want to sell phone-related products.

The long-distance carriers are worried that when the local phone companies begin to compete for long-distance customers, which already has been approved, the companies would have an unfair advantage if they can access information about the long-distance calling habits of their current local-telephone customers.

Pacific Bell said it had planned to look at long-distance charges, which are included in phone bills sent to Pacific Bell's roughly 9 million residential customers in California, only if the customer authorized them to do so. However, a federal judge in Oakland sided with AT&T last week by ruling that Pacific Bell can pay points only on its own charges. No peeking at the long-distance portion, the judge said.

That leaves Pacific Bell in an awkward spot. For the last two months, the company has been actively marketing its program and hundreds of thousands of customers have signed up, said Elizabeth Gradinger, president and general manager of Pacific Bell Extras, a subsidiary of Pacific Telesis Corp. All were promised points based on their "total phone bills"--including long-distance charges.

By next week, when the company's first Awards statements are expected to go out, Pacific Bell has to figure out how to keep its promises to both consumers and the court. How will they pay the points without peeking? They still don't know.

"We are now determining how to do that in a way that still makes it easy and rewarding but without getting into trouble with the judges," Gradinger said. "What we will be doing is looking at some creative ways to give customers the points they are due, without looking at the long-distance portion of the bill."

Stay tuned.

ATM fee restrictions sail through Sacramento

Earlier this year, the major automated teller machine networks lifted restrictions that prohibited banks from charging fees to non-customers who used their ATMs. Since then, public furor over the hidden fees has put ATM bills on the legislative fast-track in both California and Washington.

The California ATM bill, which sailed through the state Assembly and was recently signed by Gov. Pete Wilson, requires banks to disclose their fees on everything from "foreign" ATM use--that's when a non-customer uses a bank's ATM--to the fees that banks charge their own customers for an account statement. The fees will be disclosed on the ATM screen, at which time customers would have the option to cancel the transaction.

The law is expected to go into effect on July 1, 1997. In the meantime, ATM users beware.

Study provides investor warning

You should think twice before you buy stock in an initial public offering from the brokerage firm that brought the company public, according to a study by Cornell University's Johnson School of Management. IPOs recommended by the firms that brought them public (sold their stock to the public for the first time) underperformed those recommended by unrelated brokerage houses by 55% in the two years following the public offering, according to the study. Those recommended solely by underwriting brokers not only underperformed, they lost money on average during the first year after going public, according to Cornell researchers.

Coupons without the clipping

If you like grocery store coupons, but you hate the constant clipping, Southern California supermarkets have a high-tech option custom-made for you, if you have a computer with Internet access. Jump to and you can order coupons, recipes and free product samples from a host of participating markets, including Ralphs, Vons, Hughes and Lucky.

Lest you think your clipping days are over, you should know that the coupon offers are fairly sparse and often for lesser-known brands and products. Still, the site offers some attractive bells and whistles, including shopping tips and meal planners. Be careful what boxes you fill in. It seems clear that part of the purpose of this site is to gather marketing information about you. Those who are more interested in privacy than prices might want to stick with the scissors.

Consumer Checklist is a new feature covering a range of pocketbook issues of interest to Californians. To contribute information about new legislation, products, services or surveys, write to Kathy M. Kristof, Business Section, Los Angeles Times, Times Mirror Square, Los Angeles, CA 90053, or e-mail

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