Tales of the Marketplace, Vol. 1

I'm on vacation for two weeks, but for a consumer writer, time away from the office often doubles as field work. I've already had one experience that has me pondering whether an unfamiliar practice is fair or foul. I'm not ready to condemn it – for now, I'm just interested in hearing what other people think. If you have information or a reaction, hit the comment button and let me know.

The story takes place at Lenscrafters, where I was shopping for a new pair of eyeglasses that I needed in a hurry, before I hit the road. As I tried on frames, I saw a sign offering $100 off a new pair of prescription glasses. I even asked the manager about it; she assured me it applied to all prescription eyeglasses orders.

That was welcome news. Though I'm fortunate to have eye-care coverage under my health-insurance plan, I knew it paid a limited amount. I expected the balance for my bifocal, scratch-resistant lenses and new frame would still come to more than $200. When she totaled the tab, she confirmed I was right.

But a funny thing happened when it came time to pay. No $100 discount.

Why not? Because my insurance paid part of the cost, and the rule was one subsidy per order. "You don't get both," she told me.

I didn't raise a fuss – I wanted the glasses, and figured a protest might mean a delay. Besides, I could easily imagine a rationale, perhaps advanced by some thoughtful employee at a corporate retreat: "You know, these prices are pretty stiff, especially for folks who don't get a subsidy from their insurance company. Maybe we should target a discount for the people who have to pay he full price." I'd have no quarrel with a pharmacy taking that approach for prescription drugs, because I know cash-paying customers are stuck paying artificially high prices for them. In effect, they subsidize deep discounts negotiated by insurers and pharmacy benefit managers.

But as far as I know, this Lenscrafters' policy is something else. My insurer hasn't negotiated a special price – unless there are some sorts of undisclosed rebates involved. The insurer simply pays part of the tab, and I pay the rest. The bottom line seems to be that Lenscrafters takes in $100 more for a pair of glasses from somebody with insurance than from somebody without.

Justified or not? Tell me what you think – or if I'm looking at this through a faulty lens.

Help writing a complaint letter is just a click away

In this age of instant communication, letter writing sometimes seems a lost art, eclipsed not just by the telephone but by e-mail, instant messaging, even cell-phone texting.

That's sad for those who cherish the care and thoughtfulness of an old-fashioned letter – even one composed on a computer. But for a dissatisfied consumer, it can be costly, too. Sometimes a written complaint is the only way to get someone's attention. Sometimes it's necessary to preserve your legal rights. And it's a crucial step if you'll ever need to document the facts of your complaint.

Here's the good news. The Internet may have contributed to a common discomfort with letter writing, but it also can lead to a solution, through its wealth of sample complaint letters that can be cut, pasted and modified to the specifics of almost any situation.

Here are a few that I've found in a quick search – use them, or look for your own.

Have a problem with a product? The Federal Citizen Information Center in Pueblo, Colorado, is is a great resource for all sorts of information, much of it available on its Consumer Action Website. It offers a generic sample complaint letter – in printer-ready form, no less – that's adaptable for gripes about virtually any goods or services.

But the Web’s real advantage is its specificity.

Say you have a problem with a mortgage-loan service company, perhaps related to the transfer of your loan, problems with escrow, or the imposition of unreasonable fees. It may be covered by the federal Real Estate Settlement Procedures Act; this FTC mortgage-rights brochure will help you figure that out. And it includes a sample letter you can use to try to enforce your rights.

What about a problem with a credit-card account? Bankrate.com offers this sample letter for disputing a charge.

Or say you’ve been dunned by a company for a payment you’ve already made. Scroll through this “How to Complain and Get Results” brochure from the Indiana Department of Financial Institutions, and you’ll find a Microsoft Word formatted complaint letter that fits the bill, so to speak.

How about a complaint about cell-phone service? Consumers Union has a sample letter to a wireless carrier that yours will hear loud and clear. It also has a page full of carriers’ addresses, plus instructions for filing complaints with state and federal regulators, if you can’t solve a problem on your own.

You can even find a sample letter of complaint about a fabric-care problem. No longer do you have to create one out of whole cloth.

Obviously, I'm just scratching the surface. With a search engine and a little imagination, you’ll easily find scores of sample letters. But before you start, a couple of caveats:

One is that you’ll also find a number of sites, some managed by law firms, that will offer to draft a letter on your behalf – for a fee. You might ultimately need legal advice in any dispute. But you can probably take the first step yourself, with a little help from the Internet.

The other is that, just like in elementary school, neatness counts, so take care that your cut-and-paste letter doesn't look like a sloppy clip job. And be sure to proofread carefully. Trust me: Your complaint will carry more weight if it doesn't include a return address like "1234 Main Street, Anywhereville, USA."

Above all, remember your goal: A good letter gets your gripe on the record and gives a company a clear chance to do the right thing. With any luck, that's all you'll need to do.

Two titans on a level playing field: Who gets crushed?

Ever since June's Brand X decision, in which the Supreme Court ruled that cable companies weren't required to sell access to their lines to competing Internet services, everybody has assumed that the FCC would soon give in to a longstanding demand for a "level playing field" from the Baby Bell phone companies, which usually own the only alternative "last-mile" of wire to people's homes.

Today, the Federal Communications Commission did the deed. The text of its decision isn't out yet, and won't be at least until next week, but the outline is clear from the main news release and the accompanying commissioners' statements. It seems as if the FCC's two Democrats, who concurred in the ruling supported (and presumably written) by the two Republicans, traded their tacit approval of the inevitable with what they hope will be tangible consumer protections.

Their biggest achievement may be this policy statement, titled "New Principles Preserve and Promote Open and Interconnected Nature of Public Internet." In theory, it should prevent companies like Verizon or Comcast from blocking access to Internet sites that sell content or services that compete with what they sell – think VoIP phone services, or movies-on-demand – or intentionally undermining those sites' performance. In practice, it remains to be seen whether that policy can be enforced.

Beyond that, it's hard to see the promotion of a dupoly – a well-entrenched cable franchisee vs. incumbent Baby Bell – as an improvement. The FCC's ruling does include some provisions that may help alternative DSL providers such as Covad survive, but it will be much more plainly at the sufference of Verizon, SBC and the rest of the companies that inherited Ma Bell's old network. (To see how two leading consumer groups reacted, see my previous posting.)

In the short run, duopoly is the best we'll get in most places unless Congress takes steps to counter the laissez-faire legacy of former FCC Chairman Michael Powell, who argued that the only real competition would come from companies that own their own networks.

The picture is cloudier here than almost anywhere else. Philadelphians might enjoy extra competition if the city succeeds with its plan for a municipal wireless-broadband network. But Verizon's plan to invest in a fiber-optic system and go head-to-head with Comcast will be hobbled by another set of arcane rules: the ones that govern access to programming.

The problem is this: Even if Powell's dream comes true – if this kind of big-boys-only competition eventually breeds broadband innovation from fixed-wireless providers or electric utilities or somebody else – there will never be meaningful competition with companies like Comcast if they can control and limit access to content, as Comcast does in Philadelphia by refusing to share Comcast SportsNet with satellite competitors.

At the very least, we need Congress to close the "terrestrial loophole" – the rule that enables Comcast to keep that must-have local programming to itself.

If that issue indeed comes up this fall in Senate hearings, as rumors on Capitol Hill suggest, Philadelphians need to make some noise – just as we're urged to do at those Phillies and Sixers games we can't see on TV without paying Comcast's toll.

Consumer groups blast the FCC's 'level playing field' for Baby Bells

I have mixed feelings about the wisdom of the Federal Communications Commission's decisions today to level the playing field between DSL and cable broadband providers, as I explain in a separate posting. Under the circumstances, the leading pro-consumer voices on the commission, Michael Copps and Jonathan Adelstein, may have made the best deal possible.

But here's a less-mixed review from consumer advocates who follow FCC policy more closely than anyone else who holds down a day job. There's no on-line link yet, so I'm just cutting and pasting the text:

(Washington, DC) – Consumers Union (CU) and the Consumer Federation of America (CFA) warned that today's Federal Communications Commission (FCC) order restricting access of competitors to digital subscriber lines (DSL) will force existing independent broadband providers out of the market and drive up the price of high-speed Internet for consumers.

"The Federal Communications Commission continues down the wrong path on deregulation, allowing giant phone companies to tighten their stranglehold on competition, stifle innovation, and reach even deeper into the pockets of consumers," said Gene Kimmelman, Public Policy Director at CU. "Consumers will be forced to pay higher prices for Internet access."

"Open access requirements for Bell-owned DSL lines are responsible for some of the only true competition that exists in the residential high-speed Internet market today," said Mark Cooper, Research Director at CFA. "Unfortunately, the FCC has eliminated these requirements and virtually guaranteed those consumers lucky enough to have both cable and DSL options will have to buy a package of high-priced services they may not want just to get high-speed Internet."

Despite disagreeing with the FCC's approach to DSL lines, the consumer groups applauded the FCC's adoption of principles providing guidance that cable and telephone companies should allow their subscribers to use the Internet as they wish. But, the groups cautioned the policy did not include enforcement measures.

"The policy may help to prevent cable and telephone companies from using their monopoly power to block consumer access to websites, prohibit their use of competing Internet telephone service, or prevent them from using computer applications" said Cooper. "This is an important clarification to ensure consumer choices and rights to diverse points of view."

Cooper added, "However, if the Commission fails to make clear its intention to act promptly to enforce these principles and take action against any violations, it provides mere lip service to consumer's right to unfettered access to Internet content and services. A right without a remedy is no right at all. If the FCC won't make that clear, Congress must."

"The FCC's action today underscores the need for a competitive broadband alternative that does not depend on cable or phone lines-wireless Internet," said Kimmelman. "As the FCC shuts off competitor access to DSL and cable lines, it should free up airwaves to foster affordable wireless Internet offered by independent companies."

Regulation, shmegulation

To a journalist, there are few things more frustrating than realizing you have unknowingly passed along misleading information.

For years, I've told readers that the Telecommunications Act of 1996 deregulated cable-TV prices, with one exception: the price of limited-basic service and of the equipment needed to watch it. Those are still regulated by local franchise authorities, I've repeated each time the subject came up.

But what does that mean? Last month, while researching a column on the question of why Comcast requires its Philadelphia customers to rent a converter box – and why it could raise the price tag for a converter by about 20 percent in one year – I discovered the answer: less than you might think. (To read last week's column, click here.)

City officials say Comcast fills out Federal Communications Commission forms and uses FCC formulas to compute a "maximum allowable price" for each regulated service. As long as it comes in beneath that price, all the city can do is nod approvingly. Moreover, Comcast isn't just allowed to recover the costs of these devices that it says we must have to protect the security of its cable signal. It's guaranteed a profit on its investment in them.

Does any outsider examine a cable franchisee's computations? The city doesn't – it doesn't have the expertise, city officials say. Nor, as far as I can tell, does the FCC.

So how would anybody, anywhere, know whether a cable company was cooking its books? They wouldn't.

Stay tuned. I'm still trying to figure out why Comcast's maximum allowable price for converters could change so dramatically from one year to the next. City residents who subscribe to Comcast's standard "expanded-basic" service tier now pay almost $5 a month for a converter and remote.

I'll let you know what I find.