[Congressional Record Volume 140, Number 136 (Monday, September 26, 1994)]
[Extensions of Remarks]
[Page E]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]


[Congressional Record: September 26, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]

 
 PROTECT SMALL BUSINESS CONSUMERS: REQUIRE DISCLOSURE OF LONG DISTANCE 
                            RESALE SERVICES

                                 ______


                           HON. SAM GEJDENSON

                             of connecticut

                    in the house of representatives

                       Monday, September 26, 1994

  Mr. GEJDENSON. Mr. Speaker, today I am introducing legislation to 
require long distance telephone service resellers and their marketers 
to fully disclose the long distance service carrier that they offer, 
and to disclose their actual relationship to the long distance carrier 
advertised. I invite my colleagues to join me in supporting these 
important consumer protections, which particularly impact small 
businesses.
  The need for this legislation arose as a result of the increasingly 
competitive long distance telephone market in which companies known as 
resellers offer long distance telephone service in a variety of 
discounted plans. Sometimes they have their own lines and offer long 
distance service plans; sometimes they buy blocks of telephone line 
time from AT&T, MCI, Sprint, or one of the large long distance carriers 
at a discount, repackage them, and market them as discount plans. This 
is a legitimate industry and can save consumers and small businesses 
money on their long distance service.
  In recent months, however, small businesses have been receiving 
calls, letters, and unsolicited faxes from firms offering discounted 
long distance telephone service. In many cases, these solicitations 
lead the customer to believe that the reseller is merely an extension 
of the existing carrier, by advertising ``AT&T Long Distance for Less'' 
or by calling themselves the ``AT&T Corporate Discount Plan.'' But in 
fact the reseller may have no connection with AT&T, and may even have 
no intention of consistently providing repackaged AT&T service, 
choosing instead to shop around for the cheapest long distance time to 
resell to the customer.
  Thinking that they are getting a good deal from a subsidiary, small 
businesses, many of which work on a very tight margin and need to pinch 
pennies wherever they can, jump at the chance to save money on their 
long distance telephone service. Unfortunately, they do not get what 
they expect. As it turns out, the firm which sold them the service has 
no connection to AT&T or MCI or Sprint. The unsuspecting small business 
has had its long distance service provider changed, and is none the 
wiser--until there is a problem.
  Small businesses, like Jan Electronics in New London, CT, depend on 
their telephones--particularly their 800 service--as their lifeblood. 
What happens if something goes wrong? What happens if their 800 lines 
go down? Whom do they call? In many cases, since they think they have 
AT&T, they will call AT&T, only to be told, ``No, you are not our 
customer; those are not our lines.'' Upon calling the local exchange 
carrier, the customer finds out that in fact their long distance 
service provider is a company they have never heard of. Just to 
discover this information they have lost precious time, sales revenue, 
and who knows how many customers. What is worse, the time was wasted 
just looking for the right place to get service. The problem has not 
begun to be fixed.
  In recent months, the Federal Communications Commission, which 
regulates interstate telephone service, has received more than 650 
complaints about misrepresentation by resellers. Because it is a new 
matter, the FCC has issued no regulations, and tries to handle each 
complaint on a case-by-case basis. So far, they have had little or no 
success in stopping the problem.
  The legislation I am introducing today would require long distance 
resellers and their agents to disclose their actual relationship to the 
long distance carrier they are selling--if there is a relationship at 
all. Resellers will not be able to advertise ``the AT&T discount plan'' 
if they are not providing AT&T service, nor can they represent 
themselves as an MCI company if they are not. The bill further requires 
resellers to disclose the name of the actual interexchange carrier or 
long distance carrier to the customer. This will mean that small 
businesses will know exactly whose service they are getting and whom to 
contact when there is a problem with service.
  This legislation will protect consumers and small businesses by 
requiring that complete information on their long distance service be 
provided by resellers. Furthermore, this legislation will be good for 
the telephone resale industry. By weeding out the bad apples, 
credibility can be restored and legitimate businesses can more easily 
market their services.

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