Communication is the lifeblood of business, and telecommunications are at the heart of all business communication. Companies know that they need reliable, quality service of sufficient capacity to handle their needs and they are often intrigued by the latest service or technology; but the billing structure remains a mystery to most. Telephone service is taken for granted at the same time that it is grossly misunderstood. And, while businesses have historically been at the mercy of a monopoly regarding phone service, the phone company has done a pretty good job of connecting businesses to their customers. The problem with former monopolies is that they continue to think and act like monopolies.

With quality and reliability issues fairly well resolved, businesses are focusing their attention on the cost of service. However, many companies rely on the phone company to advise them on the most cost effective services available and to insure that they are being billed properly. Others rely on their internal telecommunications personnel who were trained to think like the phone company. It is important to understand that in the course of trying to improve its bottom line, the phone company may not be looking for ways to help you reduce your phone service costs. Is it coincidence that 80% of billing errors favor the phone company?

In 1934, the Federal Communications Commission was created to regulate the interstate aspects of telecommunications. However, local phone service and in-state long distance issues were left to the states to regulate.

In 1975, in response to public outrage about soaring utility bills and a telephone company scandal, the State of Texas established the Public Utilities Commission to represent and protect the public interest in regard to public utility rates, operations, and services. The Public Utilities Commission regulates the phone company (and other utilities) through tariffs that define the operations of the utility, the services it can provide and the rates it is allowed to charge.

Until 1984, telecommunications was the exclusive domain of monopolies, though it was regulated in the State of Texas by the PUC. The monopoly was so tightly held that companies had a phone room in their own buildings that was off limits to everyone but the phone company. Many businesses did not even own their own phones.

After the breakup of AT&T in 1984, businesses had to take on some of the responsibility of managing their telecommunications internally. Businesses now had to acquire their own phone systems and integrate them with the available service from the regional Bell operating companies, who still maintained a monopoly on service. With no internal expertise available, the obvious answer was to hire former phone company employees to manage internal telecommunications issues.

As complicated as the technology was, billing for phone service was even more complicated. Though these former phone company employees were, in fact, technicians, businesses increasingly (and unfairly) relied upon these technicians to manage not only their telecommunications technology issues, but phone service billing issues as well. Ironically, it is often a company’s internal telecommunications experts that prevent a company from getting the best possible rates for the services they use.

Business phone service is subject to two distinct types of billing errors: 1) usage errors based on the volume and duration of calls, and 2) rate errors based on the costs and fees the phone company is authorized to charge for phone service. Companies can themselves detect usage errors, but because billing structures are so highly complex, companies need specialized help to detect rate errors.

Tariff regulations are particularly complicated and are subject to frequent change. The current tariff schedule for SBC alone is made up of over 8,000 pages, with some 250,000 pages of retired tariffs no longer in effect. These rules are first interpreted by the phone companies and summarized into billing, operational and service policies that are interpreted a second time by phone company employees implementing the policies. With two levels of interpretation, there is no surprise that the rates businesses pay for phone service varies greatly from the language of the tariffs.

Tariff regulations are well outside the knowledge and skill set of telecom, IT and MIS personnel; and individuals with experience in telecommunications billing (usually former phone company employees) are typically trained to think like the phone company and rely on the phone company billing policies to resolve billing issues. To summarize, telecommunications personnel are simply not qualified to handle tariff and rate issues. However, because most businesses rely on their telecommunications personnel to handle billing issues, some telecom managers may avoid bringing in outside help for fear that if long-standing large errors are found, they will get the blame.

The Telecommunications Act of 1996 introduced competition in the telecommunications marketplace. Various companies popped up to provide alternative local phone service. A few of these companies provided their own hardware and infrastructure, but the vast majority were simply resellers of Bell service.

While one would expect that competitive pressures would have caused the industry to operate more efficiently with fewer billing mistakes, a number of factors actually caused billing errors to increase. In fact, for the seven largest phone companies, excluding cell phone companies, consumer billing complaints rose 95% from 2002 to 2003. Many of the problems that existed with the Bells prior to deregulation remained in place after deregulation and may have even been exacerbated by budget cuts and high turnover. Most competitive local exchange carriers were merely resellers of Bell service, who simply passed through any billing errors on the underlying service while adding yet another layer of bureaucracy. Additionally, newer carriers were prone to internal billing errors because they were not yet familiar with their own billing systems.

Rather than improve operational efficiency in order to be more competitive, some telecom companies tried to trick consumers into giving them their business, according to an article by CBS News. Even some of the most reputable phone companies have been accused of “competing by cheating” including continuing to send bills after service is terminated, and billing for services never ordered.

In one published example from Direct Marketing News, AT&T was accused of incorrectly billing 200,000 to 300,000 non-customers as well as 800,000 of its customers purportedly in an effort to draw inbound calls so it could pitch them on phone services while getting around national and state do-not-call lists. Consumers who called to complain were allegedly told by AT&T agents that they would have to sign up for a calling plan in order to get the incorrect fees refunded.

In another published example, a phone company in New Jersey, after paying out over $25,000,000 in refunds, decided it would only pay refunds for overcharges back for three months. Their argument was that by paying the overcharge, the customer was agreeing to the overcharge. While regulators repeatedly rejected that argument, it continued to be used. The phone company further complicated the issue by prematurely and illegally destroying customer service records that could be used to document how far back overcharges extend.

It is hard to imagine that the phone company could be capable of such tactics. If you wonder what gives them the audacity to treat their customers that way, consider how they have reportedly treated the regulators according to an article by Forbes:

For the first time, the FCC auditors… traveled the country and spot-checked telephone buildings to verify the existence of equipment carried on the books. [T]hey looked at only 25% of the Bells’ gear… at central switching offices. They discovered $5 billion in assets was missing outright. At least another $5 billion was impossible to audit, although federal law explicitly requires otherwise. Assets carried at erroneously (or intentionally) inflated costs on the books naturally lead to higher regulated prices. FCC Auditors were intent on levying large fines and seeking billions in refunds. “When the audit team started getting huge numbers, the Commission started getting very, very nervous.” “The dollars were so huge that there was no way the FCC would pursue them.” [T]he FCC negotiated with the Bells and a few long-distance titans in a series of secret meetings ending in early 2000. The resulting deal was officially named Calls, for the Coalition of Affordable Local and Long-distance Service. [T]he Baby Bells… slash[ed] the access fees they charge long-distance carriers for routing calls to their local lines, [saying] it would save customers $3.2 billion a year. [T]hey also won the right to offset that reduction by boosting flat monthly fees… $5 billion a year. The little-noticed shift in fees… also was a way for the Bells to bury what could have become a multibillion-dollar accounting scandal.

Today, there are a variety of telecommunications options for businesses, but phone service has essentially become a commodity. Price of service has become a major factor in selection of service and service provider. And, while most businesses believe that they are taking steps to insure that they are receiving the best rates available for services, very little is actually being done to hold the phone companies to the regulated rates.

In a recent survey by Communications Convergence Magazine, 55% of businesses said that their phone bills are audited regularly for billing inaccuracies. Amazingly, 50% said that the phone company provided the audit, with only about 5% of respondents saying they used the services of a third party auditing firm. In no other area of a business would a company ever allow vendors to audit themselves.

In the same survey, 73% of businesses said they believe that there are few or no incorrect charges on their phone bill. However, the FCC and independent industry analysts have determined that more than 80% of all phone bills contain errors and that 30% of all telecommunications charges are incorrect .

The largest users of telecommunications service often justify the creation of a custom tariff that provides special pricing or they otherwise qualify for pricing on an individual case basis (ICB). These organizations are the most likely to believe that there are few or no inaccuracies on their bills. However, statistics show that due to the size and complexity of these accounts, they are actually more likely to have a billing error.

Businesses and consumers tend to give the phone company the benefit of the doubt, but overwhelming evidence shows that the phone company does not proactively recommend packages or services that would reduce costs.

Bilbiography:

“Connecticut AG Slams Telecom Companies”, CBS News, December 18, 2001.

“History and Regulation of the Telephone Industry”, Fundamentals of Telecommunications: History, The International Engineering Consortium.

Jill Andresky Fraser, “Cost Control: It Pays to Audit Phone Bills”, Inc.com, Gruner Jahr USA Publishing, June 1995.

Jozef Hand-Boniakowski, PhD., “Business Report: Telephone Bill Auditing”, Champlain Business Journal, August 2003.

Michelle Kessler, “Telecom Billing Complaints Increase”, USA Today, September 1, 2003.

Scott Hovanyetz, “AT&T Bills, Upsell Draw Lawsuits and Suspicions”, DM News, May 14, 2004.

Scott Woolley, “Shortchanged”, Forbes.com, May 12, 2003.

“The AT&T Breakup – 20 Years of Confusion”, ConsumerAffairs.com, http://consumeraffairs.com/news04/att20.html#top.

Tim Green, “Finding Cash in Bad Bills”, Netflash!, Network World Fusion, May 20, 2000.

Tracy Anders Greenlee, “PUBLIC UTILITY COMMISSION”, The Handbook of Texas Online.

“What Subscribers Want In Telecom Services”, Communications Convergence Magazine, May 4, 2004.

Other Sources:

Federal Communications Commission

The Public Utilities Commission of Texas.

Teletruth

The telecommunications revolution the merging of voice, video and other data transmission and the proliferation of new telecommunications products and services has been one of America’s leading technological and economic success stories. At bottom, the key reason is that our scientists, engineers and businesses have developed and introduced telecommunications technologies at a faster pace than anywhere else in the world.

Public policies that have promoted competition have been critical to this result. Perhaps nowhere is this more evident than in the case of telephone services, where through the efforts over two decades of the Justice Department and Judge Harold Greene, and the work of the FCC, competition has become the central organizing principle of the industry.

Until the Department sued and eventually broke up AT&T, that company had a monopoly over this nation’s telephone market. It was a regulated monopoly, to be sure. But it was also one that thwarted competition and innovation. New companies like MCI that wanted to provide long-distance service could not do so because AT&T’s local operating companies refused to provide interconnections to their local loops. Similarly, other manufacturers of telephone equipment wanted to sell equally, if not more, innovative products but were frustrated by AT&T from doing so because of the telephone company’s incentives and ability, through its monopoly control of the local loop, to buy such equipment only from its wholly owned subsidiary. Western Electric.

These practices were ended when the Department of Justice, led by my antitrust law professor in law school, William Baxter, obtained a consent decree in 1982. A Modification of Final Judgment (MFJ) has since been administered with remarkable energy and wisdom by Judge Greene, to whom this nation owes enormous gratitude.

By unleashing competition in various segments of the telephone industry, the MFJ has delivered the benefits that competition in other markets routinely guarantees: innovation, better products and services, greater efficiency, and lower prices. Consider that since the MFJ:

Interstate long-distance prices for the average residential customer in real terms (adjusted for inflation) have fallen by more than 50 percent without compromising universal service;

There has been a virtual explosion in the types of telephones and services that consumers can choose from;

Competition has stimulated the development of hundreds of innovative voice and data services (such as call waiting and voice mail);

Spurred by smaller carriers and MCI and Sprint, the three largest long-distance providers (including AT&T) now have laid fiber optic cable throughout much of the country and thus have already built significant portions of the backbone for the Nil; and

Competition in the telephone equipment market has opened whole new markets and spawned the development and sale of new products.

In short, the MFJ has enabled the United States to maintain its technological leadership in telecommunications. Nations that have stuck to the old monopoly model of telephone services have fallen behind. That is why many are now trying to emulate us, rather than the other way around.

Bharatbook.com is proud to announce the new report “Telecommunications Report UAE” (http://www.bharatbook.com/detail.asp?id=19088).

Independent 5-year telecommunications forecast for the UAE.

Original telecommunications market research and telecommunications sector trend analysis for the UAE’s telecommunications industry.

Competitive intelligence, regional telecommunications company rankings and SWOT analyses on international and domestic telecommunications companies in the UAE.

The UAE Telecommunications Report has been researched at source and features latest-available data covering all headline indicators; 5-year industry forecasts through end-2012; company rankings and competitive landscapes covering leading multinational handset manufacturers and equipment vendors, domestic fixed-line and mobile operators, and analysis of latest industry news, trends and regulatory developments.

UAE Telecommunications Report provides industry professionals and researchers, operators, equipment suppliers and vendors, corporate and financial services analysts and regulatory bodies with independent forecasts and competitive intelligence on the telecommunications industry in the UAE.

Key Benefits of Report

Benchmark It’s Independent 5-Year Telecommunications Industry Forecast for the UAE to test other views – a key input for successful budgeting and strategic business planning in the UAE telecommunications market. Target Business Opportunities & Risks in the UAE’s Telecommunications Sector through our reviews of latest industry trends, regulatory changes, and major deals, projects and investments in the UAE.

Exploit Latest Competitive UAE Telecommunications Intelligence & company SWOTS on your competitors and peers through company rankings by sales, market share, investments and leading products and services.

Coverage

Executive Summary

Summary of It’s key industry forecasts and trend analysis, covering ICT, fixed-line, mobile and internet markets, and headline news of key industry events from the latest quarter.

Market Overview

At-a-glance outlook of the structure, size and value of the industry, including an overview of key players and a snapshot of regional penetration rates for fixed-line, mobile and internet markets.

Business Environment Rankings

It provides a cross-border analysis of telecoms regulatory systems across regional markets, and their investor prospects, discussing the merits and downfalls of each country’s business environment, and ranking them in order of competitiveness. The rankings take into account industry factors, such as Market Maturity, Growth Potential, Competitive Environment and Licensing Framework in addition to It’s political and economic risk ratings.

It 5-Year Industry Forecast

Historic data series and 5-year forecasts to end-2012 for all key industry indicators (see list below), supported by explicit assumptions, plus analysis of key downside risks to the main forecast.

Fixed-Line Telephony – Telephone Lines (’000); Telephone Lines/100 Inhabitants;

Cellular Telephony – Phone Subscribers (’000); Mobile Phone Subscribers/ 100 Inhabitants; Mobile Phone Subscribers/100 Fixed Line Subscribers;

Internet Markets – Internet Users (’000); Internet Users/100 Inhabitants; Broadband Internet Subscribers (’000); Broadband Internet Subscribers/100 Inhabitants;

Multimedia Markets – PCs (’000); PCs/100 Inhabitants; TV households (’000s); Pay-TV subscribers (’000s); Pay-TV subscribers/100 inhabitants; Cable TV subscribers (’000s); Direct-to-Home Subscribers (’000s)

It 5-Year Macroeconomic Forecast

It forecasts for all headline macroeconomic indicators, including real GDP growth, inflation, fiscal balance, trade balance, current account and external debt.

Competitive Landscape & Rankings

Commentary on key operators highlighting ownership structures, latest available revenue figures, market share analysis and ARPU counts.

Company Profiles & SWOTS

Company profiles, including SWOT (strengths, weaknesses, opportunities and threats) analyses, fully researched senior executives and contact details, business activity, leading products and services, and a record of all recent foreign direct investments and projects.

Executive Summary

The Sector At A Glance

Key Insights On The Telecomunications sector of United Arab Emirates

The future of the UAE’s fixed-line market is expected to be one of continued slow growth, at odds with our earlier expectations that the sector would begin to flatten out, and eventually dip. Annual growth has remained fairly consistent over the past few years, with 2004 experiencing growth of 4.6%, followed by 2005 growth of 3.5% and 4% in 2006, taking the total fixed-line subscriber base to 1.28mn users. Our confidence that the market will continue growing derives from the ban on Voice over Internet Protocol (VoIP) services by the telecoms regulatory body, and until such a time when use of VoIP is allowed, customers will have little alternative than to use services as provided by Etisalat and du. This forms the Telecommunications Regulatory Authority’s (TRA) method of protecting its domestic companies and industry. Etisalat has sought to encourage usage in the international long distance (ILD) market by offering the corporate sector a 35% discount. We are now forecasting that fixed-line will grow at a consistent rate, in line with previous movements in the market, to achieve a penetration rate of 28.6% by the end of this year.

Further, the dominant operator is also seeking an aggressive strategy towards its broadband market position, with newcomer du currently trialling WiMAX. Etisalat set a precedent in the UAE with the announcement that it would reduce broadband tariffs – one of the highest in the region – and on a par with regional peers such as Bahrain’s Batelco. The operator is hoping that it will be able to make an early entry into the triple-play arena, with a well-established base across the mobile and fixed-line sectors, and ahead of newcomer du. To this end, it has also been pursuing a fibre-optic cable project, and recently added a new agreement to its existing portfolio with a US$400mn joint venture linking the Middle East, India and Western Europe.

Even as the operator branches out into the triple-play arena, it is well aware of the saturated nature the mobile market presents, leading it to pursue an international expansionist strategy. Two likely takeover candidates are Algérie Télécom, which is also the sole owner of mobile operator Algeria’s No.2 Mobilis and Kuwait’s Wataniya (it failed in its objective here). Having said that, Etisalat will need to be vigilant over its domestic market – newcomer du is more than likely set to take subscribers away from the market, given its 100% penetration rate, with MNP facilitating the move. The 31-year absence of an alternative service provider is more than likely to have made customers keen to try out a new provider, and unless it is able to provide a good level of service and high network quality, Etisalat could soon find itself permanently losing market share. To this end, Etisalat has sought to satisfy UAE customers, who are technologically more savvy than other users in the region given the modern technological infrastructure they enjoy, leading with the announcement this quarter that the migration to Next Generation Networks (NGN) had begun, with around 10% of its existing network to be NGN-ready by YE07.

For more information kindly visit: http://www.bharatbook.com/detail.asp?id=19088

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