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80 percent of U.S. businesses are overcharged on their phone bills while telecom companies reap profits from "accidental" billing errors

Sunday, December 11, 2005 by: Ben Kage
Tags: phone bill, telecommunications, business ethics

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When Alexander Graham Bell placed the first phone call to Thomas Watson, it is doubtful he was considering whether he would be overcharged for the call. Many American businesses have the same attitude, and it's just easier for them to trust that the phone company is charging the correct amount than scrutinize each item on the bill.

Even though most companies would list the phone bill as one of their top expenses, few take the time to have someone look over the bill for errors. Those that do usually only employ a part-time worker, but a study by The Gartner Group may open their eyes. The study found that 80 percent of U.S. businesses have errors on their phone bills that are never found or reported.

The problem comes from the long-standing system phone companies use to track their services and billing. The system is split into two sections: The section that keeps track of what services a customer has, and the section that bills the customers. "The process itself is inherently faulty," says professional telephone consultant Frank Stoczko. "It's quite often the case that there's faulty entry between the two systems, which results in faulty billing." Stoczko says a customer may get a feature (such as caller ID) and then cancel it, but the phone company may only cancel it from the service section of the billing system. Then, customers are being charged for a service they no longer have.

Stoczko has seen this type of overcharging for over 17 years. Prior to 2004, Stoczko checked bills for errors for a major call center company that had call centers around the country, and he said he often saw small surcharges and mistaken charges that most companies would just blow off. However, small charges add up, especially for big businesses. In the case of Stoczko's employer, he called in a consultant who found a lot of errors the company analysts had missed, and saved them a six-figure amount of money in the process.

"It was definitely an eye-opener for me," Stoczko said. As well as opening his eyes, the experience had another effect on him. "It was one of the things that -- when I looked at what I wanted to do for a living really appealed to me, because it's doing a good thing for people and for companies."

As president of Telecom Expense Analysis Management No Cost To You (TeamNCTY), Stoczko and his Pennsylvania-based team now offer consulting services to companies to help save them from this overcharging. They analyze individual charges on the bills, and then alert the companies to the errors in a findings summary. "We also look at how the client is using their telecommunications services, where the business is today, and where they want to be three, five or 10 years down the line," said Stoczko. "This allows us to formulate an overall plan for them and then deliver our findings and recommendations in an executive summary report."

The satisfaction Stoczko gets when he shows his clients their savings is a big part of his reward. "There's a significant amount of money to be saved. Quite often, I feel almost like Santa Claus when I walk in to my client with the final report," he said. "Most clients don't expect the kinds of savings that I bring back to them." Stoczko also proposes to his clients that they contribute 10 percent of their savings back to their favorite charity.

According to Stoczko, billing errors have been occurring since the dawn of telecommunications, and certain phone providers can be almost relied on to make trademark mistakes. "As soon as I see who the telephone company [on the bill] is, I look for those specific things, because, invariably, those kinds of errors are repetitive; they happen quite often," he said.

Without actually stating that phone companies make these erroneous charges on purpose, Stoczko does point out that it is in the phone companies' interest to allow these mistakes to be made. " [Telecoms] will just let mistakes go and wait for clients to come back and ask for a refund for that money," he said. "They will pay them that money, while the other customers' [overcharges] will just be pocketed."

However, some of the phone companies overcharge through legitimate services that are not really necessary. One such service is an insurance premium for in-house wiring that some companies charge a flat fee for (maybe $4 or $5 a month). Stoczko says it is a good idea to get rid of services like this, because it is a service that probably won't ever see use. "[Consumers] pay for the insurance for the entire time they have telephone service which could be 10, 20, 30 or 50 years and never once use that service, or maybe once in a lifetime they'll use that service," he said. "Most people would be better served by simply cutting that from their bill, discontinuing it, and if they ever have an issue, calling in a technician for $40 to $60 per hour. In most cases, they could fix it in an hour or two. You'd be way ahead of the game."

Most phone companies are willing to work to correct the problems, says Stoczko. However, some companies, especially the older, more established ones, can give him some bureaucratic static when he is trying to recover his clients' money. "You can go for weeks and months just trying to get to the right person that you need to talk to, because one person sends you to another person, who sends you to another person," he said, but that's not he only obstacle Stoczko faces. "It's quite often the case that a vendor will say, 'Well, it was on your bill. Why haven't you ever noticed it before?' Well, the fact is that it should never have been on my bill to begin with."

TeamNCTY doesn't stop until they have finished the job, though. According to the TeamNCTY website, www.teamncty.com, the company saves 80 percent of its clients 18 to 28 percent of their annual telecom expenses, and 70 percent of the time they find the savings without needing to change their clients' vendors. The reason the team has "No Cost To You" as part of their name is because clients do not have to pay the company up front. TeamNCTY only charges 50 percent of the amount their clients save on their phone bill over the subsequent two years.

"Our incentive is to maximize our clients' savings," Stoczko said. He added that he doesn't want people to have a preconceived notion that because Stoczko works in telecommunications, he's in sales. "I'm an independent consultant; whereas a sales representative is really focused on selling you as much as he can because his pay or his commission is based on how much he sells. From my perspective, my commission or fee is based on how much I save you."

Most companies cannot afford to spend the time and money chasing down mistakes on their bill, and then wading through the significant red tape involved in obtaining a refund. Because this process is TeamNCTY's job, it is no problem for them to take care of that kind of hassle, and the best part of the deal for customers is: If TeamNCTY doesn't find any money-draining mistakes on the phone bills, they don't charge clients a penny.

TeamNCTY is not designed to save money for individual phone users, but Stoczko said overcharging is still common on private phone bills. The trick is to not gloss over your phone bill. Stoczko recommends closely scrutinizing your bill each month, because the extra time you spend going over your bill can save you a lot of money in the long run. "We all know what a telephone bill looks like and how complex they can be, so, most people just kind of ignore it," Stoczko said. "They think, 'It must be right. I looked at it the first time I started my service and everything was right then, so it must be right now.' The reality is that things change over time, and there could be errors that creep into the bill of which you're totally unaware."

A consumer may be paying a bill, and if they suddenly see an extra $5 charge, most assume it's a surcharge and pay the bill without thinking about it. According to Stoczko, the reality is that the charge could have come from a feature used by anyone in the customer's area, or data could have been entered into the billing system incorrectly. These small charges add up over the course of service, so Stoczko recommends keeping a close eye on your bill, and not paying for anything you're not using.

The overcharging problem is rampant across all aspects of telecommunications, but Stoczko says there are some places customers can go where they are less prone to costly mistakes. "I think it is less prevalent in cellular phone services. It still occurs periodically, but it's less common," he said. All issues with emergency calling aside, the wildly popular Voice over Internet Protocol can also allow customers to relax about their phone bill. "I think there is significantly less opportunity for [overcharges], because it's a lot less complex. The bills are more straightforward; you don't have all of the taxes and surcharges and things. It's typically flat-fee based."

Ignorance and complacency are two big obstacles for companies and phone users to overcome before they can save money. Many do not think to check their bill, and few realize just how much money they are giving away over the course of their service. It is a good idea to take the time to look over your bill for mistakes, or hire a consulting firm like TeamNCTY, if it is within your means. Just don't rely on the phone company to do it for you.

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