ROANOKE TIMES
Copyright (c) 1997, Roanoke Times
DATE: Thursday, January 23, 1997 TAG: 9701230049
SECTION: NATIONAL/INTERNATIONAL PAGE: A-1 EDITION: METRO
DATELINE: NEW YORK
SOURCE: Associated Press
LONG-DISTANCE carriers used to reach out and cut off deadbeats' phone service. But threats of cancellation aren't what they used to be.
Telephone deadbeats were once pariahs.
Their failure to pay monthly phone bills faced the ultimate punishment from AT&T and other long-distance carriers - cancellation of phone service.
Now that threat is starting to fall on deaf ears.
Instead of coming up with the cash, more and more phone debtors are simply switching to one of the alternate phone carriers that have sprung up in recent years.
And they're sticking Ma Bell with the old bill.
Uncollected bills, particularly from business customers, cost AT&T Corp. $200 million in the fourth quarter as the nation's largest long-distance provider reported profits on Wednesday that were shy of Wall Street's expectations.
AT&T cited increased delinquencies, fraud and bankruptcies by customers. By writing off the debt as uncollectible, AT&T illuminated a potentially ominous trend for long-distance companies, which are locked in fierce marketing battles with each other for new customers.
Spurred by government deregulation, a flood of new long-distance rivals in recent years has made it easy for deadbeats to just use another company.
``It used to be that in the monopoly days, when people didn't pay their phone bills they didn't get phone service,'' AT&T chief financial officer Rick Miller said in a telephone interview.
``[Now] when phone service gets canceled they have an option to go somewhere else.''
Emboldening customers is a trend by states toward blunting the main threat long-distance companies employ against deadbeats.
In the past, long distance companies were able to cut off not only a customer's long-distance service but demand that local carriers cut off service as well. But in recent years, a number of states have barred long-distance carriers from pulling the plug on local service, according to Brad Ramsay, assistant general counsel at the National Association of Regulatory Utility Commissioners, a states' lobbying group based in Washington, D.C.
The problem is not confined to AT&T. MCI acknowledged in its third-quarter financial report last year that ``uncollectibles'' increased during the period, though a spokesman on Wednesday said the problem was not growing.
Among local phone companies, unpaid bills grew 10 percent to $1.11 billion between 1992 and 1995, according to the Federal Communications Commission.
In the long-distance business, the problem seems to be hitting market leader AT&T the hardest. The company said the surge in phone debtors began last year, particularly among business customers.
But consumer advocates had little sympathy for the phone carriers, which they have routinely criticized as being insensitive to consumers' needs for more affordable service.
``This may be the comeuppance of the long-distance companies' aggressively marketing to switch customers,'' said Gene Kimmelman, co-director of Consumers Union, publisher of Consumer Reports.
LENGTH: Medium: 64 linesby CNB