Pac Bell to
pay fine under

The Associated Press
Friday July 05, 2002

SAN FRANCISCO — Under a tentative settlement with state regulators, SBC Pacific Bell has agreed to pay what would be a record $27 million fine for billing tens of thousands of customers for high-speed Internet service they never requested. 

Pacific Bell initially downplayed the problems, but on Wednesday recognized them and promised to improve its DSL billing practices and promptly credit any customers who are billed improperly. 

Since 1999, about 800 customers have complained to the state Public Utilities Commission that Pac Bell billed them — sometimes twice — for DSL services they didn’t order, didn’t receive or wanted to drop. Under the settlement, the company acknowledged incorrectly billing between 30,000 and 70,000 customers. 

DSL, which stands for digital subscriber line, is a high-speed Internet service that works over ordinary telephone lines but is many times faster than standard dial-up connections. 

“They lied to the public, they lied to the press, and they lied to the commission,” said Regina Costa of The Utility Reform Network, a San Francisco-based consumer group. 

One customer said that a month after inquiring about DSL service, she received a bill charging her $99.95 for activation and a monthly service fee. 

“I didn’t even have a computer at the time,” said Bobby Schaefer of San Diego. “I was gathering information.” 

If approved by the commission and an administrative judge, the $27 million fine will go to the state’s general fund. It would be the largest ever levied by state utility regulators, surpassing the $25.6 million Pac Bell was fined last year for misleading marketing tactics. 

Pacific Bell CEO Chuck Smith said the company is pleased with the agreement. 

“We faced a tremendous challenge in pioneering the delivery of new technology to California consumers, and it is disappointing that along the way we experienced customer-service issues,” he said in a statement. “We identified those issues, and we dedicated significant resources to correct them.” 

Pacific Bell, a unit of San Antonio-based SBC Communications, has about 800,000 DSL customers. The company said it has created a new DSL billing center with 100 staff.