News

AT&T BILLING STRATEGY DRAWS FIRE
Cell phone billing plan duped consumers, say lawyers

Published by: Orlando Sentinel
Print date: May 14, 2001
Written by: Chad Eric Watt

A lawsuit filed in Orlando, California and Texas has put Ma Bell's wireless offerings in the crosshairs of some of the country's toughest class-action lawyers.

The suit charges that AT&T has overcharged wireless customers by "rounding up" mobile phone call charges on their bills while offering a flawed method to track their on-phone time.

Similar suits already have been filed in Texas and California.

The Florida version names one plaintiff, Robert Reynolds, while stating that any user of AT&T wireless phones could be a plaintiff -- clearly an invitation to create a class-action lawsuit.

The scope of the case has the potential to put it in the league with massive legal actions against the makers of asbestos, breast implants and tobacco.

And the group of attorneys assembled to take on AT&T has plenty of experience in that area.

Tom Equels, of the Orlando firm Holtzman Equels Furia, filed the case last week in Orange County Circuit Court. To take on AT&T, he's joining with legal heavyweights, including California attorney Joseph Tabacco and Texas lawyer Walter Umphrey.

Umphrey led Texas' lawsuit against the tobacco industry, reaping billions in damages for the Lone Star State.

Tabacco is a veteran of California class-action suits, including several cases leading shareholders against company executives.

"It's certainly a very serious team of lawyers with experience in big court cases," Equels says. "I have to admit, I feel very humbled some of the time."

Equels himself has taken on prominent corporations -- including the Evergreen Security Ltd. and National Heritage Life Insurance Co., considered the largest insurance fraud in the United States.

The sheer size of AT&T -- with more than $16 billion in revenue for the first quarter of the year -- makes a tempting target for lawsuits.

A separate class action over AT&T wireless billing has been filed in Pennsylvania. And a class-action suit related to the quality of wireless service has been filed in New York City.

AT&T wireless declined to comment on the Orlando suit, but actions like the one filed here are "generally baseless," says spokeswoman Lisa Burby.

"We're proud of the the way we treat our customers," she says.

A mobile phone revolution

At the center of the dispute is AT&T's one-rate calling plan, with monthly bills starting in the $30-a-month range. Countless new subscribers clamored for the service, some even disconnecting their land-bound telephone lines.

"It brought a whole other generation of users on," says Robert Saunders, a telecommunications analyst with New Jersey-based Eastern Management Group.

The one-rate plan eliminated varying fees -- including the high-cost roaming charges -- for calls placed from other areas. AT&T phones also gave users the ability to track how many minutes they had talked, allowing them a clearer idea of phone usage.

A user keeping track of his minutes conceivably could manage the remaining minutes on his/her plan to avoid paying a higher per-minute rate.

The lawsuit maintains that the "clearer idea" was deceptive, and the company never pointed out the difference.

For instance, phones equipped with meters track down to the second a user's talk time. Two 90-second calls would reflect a talk time of three minutes. But in billing those calls, each 90-second call would be rounded up to two minutes each. The customer is then billed for four minutes. Further, say the lawyers, the tracking offered to consumers may have indicated they had only used three minutes.

Despite the high-powered legal talent taking aim at the telecommunications company, analyst Saunders, for one, is skeptical that the litigation will hurt. He dismisses the contention that the practice of "rounding up" is misleading. "It's in the fine print," he says -- and pretty much the industry standard.

More important, he says, AT&T's customers seem content with the deal: "I haven't heard any consumer rumblings."

No trial date has been set.