The letter from MCI Communications Corp. that arrived at the Annandale home of William F. McDonald in August thanked him for choosing MCI as the long-distance company serving his telephone. Later, while placing a call, he heard a recorded voice saying, "Thank you for using MCI."
But McDonald says he had never chosen MCI. Rather, MCI had chosen him.
Regional telephone company Bell Atlantic Corp. predicts that about 80,000 of its customers in the midatlantic states will complain this year of being hit by this growing form of consumer fraud. It is known as "slamming," the unauthorized switch of a customer's long-distance company. Slamming amounts to nothing less than one long-distance company pirating customers from another.
Prompted by a barrage of consumer complaints, regulators and legislators are looking for ways to rein in this unwelcome side effect of intense competition in the $50 billion-a-year long-distance market. But so far, they have made no decisions.
Bell Atlantic got 18,000 complaints from customers in 1988, 37,000 in 1989, and this year the figure had reached 45,373 by the end of August -- on its way to 80,000, the company estimates. Bell Atlantic owns the various phone companies that provide local service in the midatlantic states, including the Washington area's Chesapeake & Potomac companies.
It is Bell Atlantic, carrying out the instructions of the various long-distance companies, that actually pushes the buttons that change a phone customer from one service to another. Under federal regulations, Bell Atlantic makes those switches solely on the say-so of the long-distance companies, without benefit of either written or oral instruction from the customers themselves.
All the major long-distance companies have been accused of slamming, including market-leader American Telephone & Telegraph Co. But Federal Communications Commission official Richard Firestone told a House panel last week that MCI, the aggressive Washington-based company that is now the nation's second-largest long-distance carrier, is for now the most frequently identified offender.
The subcommittee held five hours of hearings this month on the slamming issue at which McDonald and two other victims told their stories.
Louise Simmons, a public school teacher in Harrison County, W.Va., said she got calls from MCI telemarketers once every two months for two to three years asking her to switch. She said no to every call, she testified. But last February, she found out she had been switched to MCI.
"I wish telemarketing would be abolished altogether," she said. "It invades my time. I'd like to choose whom I do business with."
Anthony Lehmann-Cerquone, an employee of the Washington International School, said he had received two calls from representatives of US Sprint Communications Co., the nation's No. 3 carrier, inviting him to switch to their company. Twice he said no. But his long-distance bill last March was from Sprint nonetheless.
Long-distance companies deny deliberately engaging in slamming.
"It's a terrible business," said Eugene Eidenberg, MCI executive vice president. "It's not MCI's policy nor in our business interest for customers to be moved without their permission... . There is not enough short-term revenues to justify the practice."
But long-distance companies concede that slamming by their sales representatives does happen. Controls are not perfect, they say, and clerical errors can occur. An MCI spokesman said that it is now most frequently named in complaints because it makes more marketing calls than anyone else. A Sprint spokesman called his company's record "pretty damn good."
The rules about switching customers date to the 1984 breakup of the Bell telephone system. To facilitate the flowering of alternative long-distance companies in the face of AT&T's one-time monopoly, federal regulators ruled that they would need only oral permission of prospective customers.
Once obtained, this permission is conveyed by the long-distance company to the local phone company (in the Washington area, C&P), which makes changes at the local switching center to connect the new long-distance company to the customer's phone. Federal rules require that long-distance companies then follow up by sending forms to be signed, if they don't already have them. However, even if forms are not returned -- as is the case about 70 percent of the time, according to MCI -- the switch can legally be made.
Slamming takes place in the context of a battle for market share that is among the fiercest to be found in any American industry. AT&T, MCI and Sprint are pummeling each other with TV and print ads that often pointedly deride each other.
Despite that spending, AT&T's market share has been declining steadily, though some analysts see it stabilizing. It now has about 67 percent of the market based on revenue, according to the FCC. MCI has 12 percent and US Sprint has 8.5 percent. The balance is held by hundreds of small long-distance companies.
The big three all make extensive use of marketing by telephone, often provided by outside firms. MCI says its representatives make about 7 million calls a month to woo new customers; AT&T has said it makes about 5 million calls.
Many analysts have blamed slamming on salespeople who work on commission or are for other reasons trying to inflate their performance records. But both AT&T and MCI say that the company policy is that people do not work on commission. MCI says marketing groups may have quotas they are supposed to fill, however.
James R. Young, a Bell Atlantic vice president, said that based on the customer reports, slamming usually occurs after an unsuccessful attempt by a telemarketer to persuade the customer to agree to change his long-distance company. "Even if the customer rejects the telemarketing pitch, his next phone bill may show that his long-distance company was changed anyway -- without his approval," said Young.
Last May, seeking to curb the practice, Bell Atlantic got permission from the FCC to allow the company to collect the costs of solving a slamming complaint from the long-distance carrier that caused the problem.
The FCC is looking at several plans to resolve the problem. AT&T proposes that all long-distance companies be required to obtain written permission from a new customer before notifying the local phone company of the choice. Its competitors, however, have fought the idea and say this would hamper legitimate sales work.
The National Association of Regulatory Commissioners proposes that long-distance companies be required to send written verification of a change to the customer within three days.
MCI, meanwhile, has sent a five-point plan to the FCC proposing that standard language be used in sales contracts; that telemarketing activities be monitored and sales practices audited; that switch orders would be verified by other employees of the company; and that free switch-back be provided to those who claim they have been switched without authorization.