AT&T investigated for alleged slamming

The Federal Communications Commission recently announced an investigation of AT&T to determine if the company has been switching customers to long distance carriers without their consent, known in the industry as slamming.\nThis inquiry couldn't have come at a worse time for AT&T. After a failed attempt to be an all-in-one provider of telecommunications services, At&T announced Oct. 25 that it will break up into four separate businesses by 2002. Its stock has slipped nearly 65 percent, since its high in late March this year.\nSlamming mostly effects consumers, who usually don't file complaints when illegal switching occurs. The FCC is more aggressively attacking such practices as the number of consumer complaints has topped over 20,000 annually over the past few years, according to the Los Angeles Times. This is the third such accusation against a major carrier this year. The first two were against WorldCom and Qwest Communications, resulting in $5 million in fines. \nThe punishments for such actions are fines of up to $80,000 per slamming incident and a possible barring of offering long-distance service in the geographic area. The second punishment has never been placed on prior convictions. More than $13 million in fines have been paid this year for slamming.\nOne reason this practice occurs is increased competition created since the deregulation of telecommunications markets during the 1990s. Reed Dillinger, a financial analyst told the Los Angeles Times, these salespeople are just under tremendous pressure to perform.\nIn a bizarre case against Qwest Communications earlier this year, it denied forging the switched consent papers allegedly signed by a customer. It was later found that the papers were in fact forged using the name of the customer's deceased dog.\nAT&T has denied any wrongdoing. AT&T spokeswoman Claudia Jones told the Los Angeles Times, "We haven't seen any announcement from the FCC (of any wrongdoing)."\nIn a press release about the investigation, David H. Solomon, chief of the FCC's enforcement bureau, counters AT&T's claim most companies deny any knowledge of such practices. Their attitude changes once evidence is presented, he said.\n"When we present the facts in the course of an investigation, (the phone companies) often say, "No, we didn't know we had a problem," Solomon said. Once the evidence is presented, the companies are ready to resolve the matter, rather than plead their innocence.\nThe investigation coupled with a stock that is in the gutter puts C. Michael Armstrong, AT&T's CEO and chairman, under a lot of pressure to begin performing. If not, he might suffer the same fate as Richard McGinn, ex-CEO of of Lucent Technologies, who hit the pavement.