The Los Angeles County Consumer Affairs Department is investigating the source of telemarketing messages to area homes to determine if the caller is exploiting the Adelphia Communications Corp. bankruptcy in an attempt to scare consumers into switching to competitive technologies.
The investigation, disclosed by The Los Angeles Times
last week, began after Adelphia vice president Bill Rosendahl personally complained about the messages to Los Angeles city attorney Rocky Delgadillo. The city attorney — who does not investigate consumer abuses, only prosecutes them — turned the Adelphia complaint over to the county agency, according to Delgadillo's spokesman.
The calls leave pre-recorded messages on home answering machines.
One message recorded by a Multichannel News
reporter said Adelphia has filed for bankruptcy and has been involved in one of the biggest corporate accounting scandals in U.S. history. The message added: "Adelphia customers are already reporting service outages and blackouts."
To minimize the impact on customers, the caller offered to replace cable service with free satellite technology. The marketer is promoting EchoStar Communications Corp.'s Dish Network systems.
A call to the number provided in the message reached a full mailbox for a company identifying itself as "Satellite Solutions." But MCN
could not find an address or alternate phone number for such a company. A Dish Network spokesman told the Times
several retailers that distribute Dish use that name.
"Competition is one thing. Misleading the public is quite another," said Ana Garcia of the district attorney's office.
The competitor might not be violating laws by mentioning the bankruptcy or corporate accounting problems, but the city has no record of service outages, she said.
Adelphia officials have assured the city that the company does not intend to reduce or change service.
DISH: WE'LL ACT, IF …
EchoStar spokesman Marc Lumpkin said contracts between the direct-broadcast satellite TV provider and its retail partners prohibit the use of pre-recorded marketing messages, as EchoStar believes live solicitations are more effective.
As for the Los Angeles situation, EchoStar has already contacted city officials, he said.
"We will actively work to identify the retailer or telemarketing firm to stop them from any illegal practices," said Lumpkin.
He said the pre-recorded messages appeared to be generated by a single firm, not the majority of Dish retailers. EchoStar could impose disciplinary actions on Satellite Solutions, including the possible termination of its marketing agreement.
Since its launch in 1996, Dish Network has terminated retail partnerships for non-compliance with contract rules, Lumpkin said. But he declined to state how many retailers have faced action by the company.
Though EchoStar distances itself from the pre-recorded call approach, that does not mean satellite distributors are not targeting Adelphia, he noted. But Adelphia is not the only MSO under assault, distributors are on the attack in other markets, especially those where the cable operator is raising rates.
Lumpkin noted that Dish Network launched a new marketing strategy Aug. 1, promoting the "lowest all-digital programming package in America." A 60-channel package is available at $22.95. Under this plan, consumers pay $149 for the equipment up front, but EchoStar refunds $12.50 each month to the subscriber. If the consumer stays with the provider for one year, the rebates will cover the cost of the hardware.
Retailers will use that deal to hammer cable operators in markets such as West Palm Beach, Fla., where Adelphia recently announced a $2 increase in its digital tier. Consumers there now pay $11.95 for the digital tier. Rates for digital services bundled with high-speed data service also increased.
Retailers can also market against smaller-percentage rate hikes by Cox Communications Inc. and Time Warner Cable in San Diego and by Adelphia in Colorado Springs, he noted.