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Eating The Seed Corn
AT&T's recent actions related to their 900 service give me almost too many homilies to choose from. If you haven't heard, AT&T has announced it will raise standard billing and collection rates for its MultiQuest '900' service from 10% to 12%. The other policy shift - not announced formally - is to allow greater latitude in determining what
programming content meets their guidelines. (For an html version, go to
www.telecompute.com/GUIDELIN.html). While the first change isn't insignificant, it's also not really a big deal. U.S. transportation companies have survived the doubling of oil prices, while this increase amounts to just 20% of one cost component. The change in interpreting 900 guideline policy, however, is a big deal. Let me lay it out for you:
AT&T's billing agreements with local exchange carriers (LECs) expire in 2001
The LECs are already refusing to bill for some 900 programs on content-related grounds.
The two-pronged policy shift by AT&T will pump up both their billing and transport revenues - in the short run - as traffic increases faster than callers or Information Providers reduce activity due to price increases.
With more latitude in interpreting the guidelines, higher priced programs will increase, generating more refund claims -
and complaints.
When billing agreement renewal time comes, the LECs - who want to own the information business anyway - will have a better case for refusing to bill for '900'.
This kamikaze-like policy can have no good long term results for '900' billing. And it fits the LECs' rope-a-dope strategy perfectly. When 'cramming'
(OTE 8/98) or unwanted billing charges first became a problem, the LECs continued to pass along the bills to consumers, even when they knew the charges to be questionable. By allowing the problem to grow to an appropriate level of consumer outcry, they then persuaded the FCC to grant them an anti-trust 'free pass' and develop their own coordinated policies to block virtually anything they didn't like from appearing on their local phone bills. Don't anticipate an outcry from the LECs about this new content approval policy - yet. Expect the objections in 2001, at contract renewal time.
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