SBC Pacific Bell has engaged in a pattern of double-billing and overcharging more than 100,000 of its high-speed Internet service customers, then misleading California regulators about the extent of the problem, according to a report released Thursday by a San Diego consumer group.
The 700-page report from the Utility Consumers' Action Network, or UCAN, details extensive billing problems that it says routinely left angry SBC PacBell customers fighting for months to rid their bills of overcharges and unauthorized fees.
The report accused the state's largest phone company of signing up customers for Internet services they never ordered; charging customers undisclosed fees and costs; and disconnecting local phone service for nonpayment of disputed Internet charges.
UCAN's report also included testimony from employees who said they were instructed not to record complaints about billing for high-speed Internet service but instead to pass them on to an affiliate that does not report such numbers to regulators.
The report will be filed with the California Public Utilities Commission as part of a continuing state investigation into the complaints.
Michael Shames, UCAN's executive director and a frequent critic of SBC PacBell, said the phone company has broken four state laws and could be liable for more than $100 million in state fines and penalties for its conduct.
SBC PacBell spokesman John Britton dismissed UCAN's allegations as old news about billing problems resolved long ago.
"What he's done is just repackaged the same information and somehow made it $100 million," Britton said of Shames' report. "There were larger billing systems issues occurring back in the beginning of 2001, and we believe we've taken care of them."
Still, the report seems to jibe with the flood of complaints that has been logged in the last year with the state PUC about billing problems with the phone company's high-speed digital subscriber line Internet access service, commonly known as DSL service.
SBC PacBell is the state's largest local phone company, serving nearly 10 million customers. The company, a subsidiary of SBC Communications Inc. of San Antonio, is among the largest DSL providers in the country, with an estimated 700,000 customers in California. UCAN, after a five-month investigation, estimated that about 15% of SBC PacBell's DSL customers had some billing problem.
In July, state regulators sent SBC PacBell a letter about the mounting billing complaints and warned the company that its actions may be violating state laws. They ordered SBC PacBell to "correct these problems immediately."
The billing complaints continued, however, and in January, UCAN filed a formal complaint with regulators.
A few weeks later, the PUC launched an investigation into similar billing problems as well as into allegations that the phone company underreported the number of DSL complaints it had received.
In state-mandated quarterly reports covering 2001, SBC PacBell listed zero complaints about its DSL service. State officials said they had documented more than 280 complaints about the service during that period and more than 700 complaints over three years.
Britton, the SBC PacBell spokesman, said the report of zero complaints was an administrative oversight and that the company did not know it was required to include DSL complaints lodged with affiliated companies, such as DSL provider SBC Advanced Solutions Inc.
A revised filing listed more than 200 complaints, and after the PUC began its investigation, SBC PacBell sent regulators "box loads and box loads of information [about DSL complaints]--about 10 boxes in all," said Sheri Inouye, a PUC spokeswoman. The commission is scheduled to issue a report next week, she said, that will include an updated complaint tally based on the new data.
On Thursday, several customers told reporters that continuing DSL billing disputes with SBC PacBell have repeatedly left them in jeopardy of losing basic phone service.
Howie Knodt of Chula Vista, Calif., said he ordered SBC PacBell's DSL service as part of a promotion that included a Compaq computer if he signed up for two years of service. When he started getting the bills in early 2001, he said, they included double charges for a $21.95 monthly computer fee.
First, employees told him the problem was a computer glitch, and his account was credited for the overcharge.
"Then, beginning in May or June, every month, the bill was wrong, and then I had to call and go through the whole thing over again," Knodt said. "I just cringed when I got the phone bill.... I started getting letters saying I was delinquent."
Recently, it seemed the double billing had stopped. "But I got my bill last month," Knodt said, "and the problem was back."