AT&T hears calls to be more consumer-friendly

As consumers, we're generally accustomed to getting kicked in the teeth by big companies.

But sometimes — not very often, but sometimes — we fight back . . . and win.

That was the case with a residential service agreement inflicted by AT&T Inc. on its millions of California customers in August.

As originally written, the 8,000-word contract was a triumph of consumer-unfriendliness.

Among other things, it required customers to arbitrate disputes with the telecom giant rather than suing. It also gave AT&T the right to "generally" provide written notice of price increases at least 30 days in advance, except when such notice isn't "commercially reasonable."

"It was a completely one-sided agreement," said Mark Toney, executive director of the Utility Reform Network, a San Francisco consumer advocacy group.

TURN joined with the Division of Ratepayer Advocates at the California Public Utilities Commission in opposing the contract. They submitted legal filings, brought in dozens of people to testify at commission meetings and corralled thousands of petition signatures.

State regulators eventually told AT&T to go back to the drawing board. A revised California service agreement has now been posted on the company's website. It takes effect July 15.

Unlike the previous contract, which was written in impenetrable legalese, the new document is written for the most part in plain English.

The arbitration clause is gone — go ahead and sue the company. And AT&T now says it will definitely provide at least 30 days' notice of any price increase, and not just when "commercially reasonable," whatever that means.

Gordon Diamond, an AT&T spokesman, said the company rejiggered its service agreement at the request of state regulators and "some of our customers."

"We tried to make the document more consumer-friendly and easier to understand," he said.

Negotiating a new-and-improved service agreement with AT&T was a long and difficult process, said Denise Mann, who heads the telecom office at the PUC's Division of Ratepayer Advocates.

"We felt like we were rowing in molasses to get anyplace with the company," she said. "They had to be bludgeoned into this position."

As I wrote last year after AT&T's original contract arrived in customers' mailboxes, the document was the result of a 2006 vote by regulators allowing phone companies to have more freedom over pricing and marketing decisions. The idea was that this would create a more competitive marketplace. (Insert your own snide comment here.)

Yet Verizon Communications Inc. was able to avoid much of the mumbo jumbo when it released its own service agreement around the same time. It also saw no need to include an arbitration clause, thus maintaining customers' right to a jury trial or to participate in class-action lawsuits.

AT&T's Diamond said the company did away with its arbitration clause in the latest contract because it didn't want to complicate its dealings with state regulators.

"While we believe that arbitration is a better and more efficient way to resolve claims than litigation in the courts, it was apparent that the arbitration clause was contributing to a delay in the approval of our plans to modernize how we contract with our customers," he said.

More succinctly, AT&T figured that it needed to ditch the arbitration clause to get final approval from the PUC for the company's deregulated pricing plans. That approval was given last month, raising the possibility that AT&T could reintroduce an arbitration clause in a future contract.

"At this time," Diamond said, "we have no plans to change the service agreement."

Toney at the Utility Reform Network said members of his organization knew AT&T had crossed a line almost as soon as customers started receiving the original contract.

"We got a lot of phone calls," he said. "There was a tremendous amount of outcry from people who couldn't understand what AT&T was saying."

Mann at the Division of Ratepayer Advocates said regulators suspended AT&T's original contract last year once it became clear that opposition to the agreement was growing.

It didn't hurt that lawmakers in Sacramento, responding to constituents' complaints, started calling the PUC and asking what the heck was up with this AT&T thing, she said.

Eventually, Mann said, the company backed down — a bit.

"Right now it feels like we're holding our fingers in the dam," she said. "As soon as we turn our backs, the fear is that they'll do something equal or worse to customers."

For the moment, though, victory is sweet.