Illinois Rejects Telco Freebie Complaint

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Illinois became the first state to rule in favor of
Ameritech Corp.'s controversial "AmeriChecks" marketing program last week.

The Illinois Commerce Commission found that Ameritech had
not violated the state's Public Utilities Act by offering up to $120 in vouchers to
consumers signing up for its Ameritech New Media cable service.

Under the plan, consumers could use the AmeriChecks to
lower their Ameritech cable, paging or local telephone bills.

"The ruling vindicates the company's position that the
promotion was entirely legal and pro-competitive," ANM spokesman Geoff Potter said.

The special promotion ended last year.

Potter said the AmeriChecks program was discontinued
because it had "run its course," and it was replaced with other promotional
offerings.

"But Ameritech was never ordered to stop issuing
AmeriChecks in Illinois," he added.

The Cable Television & Communications Association of
Illinois filed a complaint with the ICC last year, arguing that AmeriChecks amounted to
cross-subsidization since Ameritech was funding the program.

"Most people were using them to reduce their local
phone bills," CTCA executive director Gary Maher said. "But Ameritech New Media
doesn't have enough customers to pay for this. So where was the money coming from?"

The CTCA also alleged that the promotion discriminated
against consumers who did not subscribe to ANM.

"It was laughable how obvious it was," Maher
said. "But the examiner never ruled on whether the plan violated the law. Instead, he
ruled from some marketing and public-policy perspective."

In his ruling, an ICC hearing examiner accepted Ameritech's
argument that the law only prohibits "charging a greater or less or different
compensation" for products or services rendered.

"Because Ameritech receives the full tariffed price
for its service, the payment of all or part of customers' bills by a third party cannot be
found to violate the act, whether the third party is a customer's roommate, an
interexchange company or New Media," the examiner concluded.

In a prepared statement, ANM president Ali Shadman said the
company was "satisfied" with the ruling, accusing cable operators of using
"unsubstantiated complaints" to try to scuttle competition.

The AmeriChecks plan was offered in three states, and
Illinois was the only one to side with the regional Bell operating company.

Ohio found that the program undermined competition, while
Michigan struck down the plan for discriminating against certain phone customers.

Maher said the Illinois association will likely appeal the
decision.

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