Consumer advocates raise alarms on Senate bill

It's hard to dispute the value to consumers of getting some competition for their cable companies. Senate Bill 2686, sponsored by Commerce Committee Chairman Ted Stevens of Alaska and co-sponsored by his Democratic counterpart, Daniel Inouye of Hawaii, was intended to make that possible more quickly, by making it easier for the Baby Bells to enter the TV business.

But consumer advocates are warning - as loudly as they can without big bucks to advertise - that the phone and cable companies are overreaching big-time on the version of S. 2686 that's headed to the Senate floor without rules for Internet neutrality but with other goodies sought by telecom lobbyists.

Just a few of the flaws that Consumers Union, Free Press and others have identified:

* The bill would eliminate the requirement that pay-TV companies offer service to all residents in a community they serve. Though promoted as a policy that would allow the Bells to build-out their systems gradually, CU says, the provision would also allow allow them "to redline low-income or minority neighborhoods," and at the same time "permit cable companies to withdraw or degrade service."

* It would end prohibitions on rate discrimination, which would allow cable companies o discount rates for well-off customers in areas first targeted by the Bells and make up the difference by raising rates in less-affluent sections of the same communities that don't yet have - and may never get - competitive service.

* It would bar states from enforcing laws governing the terms and conditions of wireless-phone service. Though they are already barred from regulating wireless rates, and the wireless market remains reasonably competitive in most places, state regulators and attorneys general argue that they have an important role in policing the market against abusive practices.

* The legislation also eliminates local authority to regulate prices for entry-level "basic" cable service, which typically includes just broadcast channels, public- and community-access stations, and a handful of other offerings such as C-SPAN. Cable companies won't say how many customers opt for this service, which also allows customers to buy premium channels such as HBO without having the buy the 50- to 80-channel "standard" or "expanded" tier in between. In 1996, the last time Congress addressed such a broad swath of telecom issues, it deregulated all cable prices except for basic service and the equipment necessary to receive it.

"The only winners today are big money, special interest industry groups," CU's Jeannine Kenney said yesterday after a series of consumer-oriented amendments were defeated and the bill was sent to the Senate floor on a 15-7 vote. "The result is that consumers, especially middle and low-income families, can expect higher prices and worse service from their current cable provider when they have no other competitor to turn to."

One key issue ended in an 11-11 draw: "network neutrality," or as some prefer to call it, "Internet neutrality." (Read the Center for Democracy and Technology's thoughtful new proposal here.)

Carefully crafted neutrality rules would prevent the cable and phone companies that CU says control 98 percent of today's broadband market from distorting the free and open nature of the Internet by blocking or degrading some sites, or favoring others, for financial or even political reasons.

"Nearly a million Americans have weighed in with their support for network neutrality," Ben Scott of Free Press, an open-media advocacy group, said in a statement. "The public outcry over today's action will be loud and vast. Consumers know what happens when just one or two telecommunications companies are allowed to shut out competitors - higher prices, fewer choices and bad service. They see it in cable and in local phone service. They won't stand for it on the Internet." (Click here for the Save the Internet Coalition's Web site, and a link to Sen. Ron Wyden's plan to block legislation that lacks a neutrality requirement. Click here to see my latest Philadelphia Inquirer piece on network neutrality, which explains how network owners could behave without it.)

I have great confidence in the market's ability to sort out winning technologies and strategies from losing ones. But when a particular market is dominated by two industries nurtured through government-granted monopolies, much more than Adam Smith's "invisible hand" is at work.

As consumers, entrepreneurs, and especially as citizens, we all have gained tremendously from the Internet revolution. We need Congress to act so that it doesn't get derailed.

FTC: Don't trust that Internet cell-phone rumor!

If you tend to believe any gossip, you're probably forgetting one of those essential lessons you learned in kindergarten: what happens when people whisper some news down the line. We used to call it playing "Telephone."

It hardly mattered what was said. Within 10 or 20 or transmissions, even the simplest message was distorted. "Steve's got the ball" begot "Steve's in the hall" begot "Cheese on the wall." From there, it was straight downhill.

Internet rumors have different life cycles, but the results can be even worse. Yes, the Internet is a great way to pass along accurate information rapidly, thanks to the virtues of mass e-mails and the verity of cut-and-paste. But if the original information is exaggerated, distorted, or just plain wrong, the result can be a persistent Internet "urban legend."

Internet legends spread like viruses - computer viruses, that is - and mutate like the natural kind. Just like both kinds, they can circulate and then lie dormant for a while, only to re-emerge as virulent as ever.

Thankfully, the Internet is also a great resource for curing bad-information viruses. My favorite antidote is going to www.Snopes.com, which researches and debunks urban legends whether they spread online or the old-fashioned way.

Often, Snopes relies on government agencies to debunk rumors on their turf, as the Federal Trade Commission did today when it issued a new warning about an old Internet legend on cell phones and telemarketers. The misleading rumor hasn't hit my computer lately, but I'm sure it will.

The FTC, which now has 125 million phone numbers on the National Do Not Call Registry, said that "despite the claims made in e-mails circulating on the Internet, consumers should not be concerned that their cell phone numbers will be released to telemarketers at any time in the near future. ... It is not necessary to register cell phone numbers on the DNC Registry to be protected from most telemarketing calls to cell phones."

The agency noted that Federal Communications Commission regulations prohibit
telemarketers from using automated dialers to call cell phone numbers. Since such equipment is widely used, that rule alone stops most marketers from cold-calling consumers on their cell phones. The FTC added that telemarketing industry groups say their members "do not intend to start calling consumers' cell phones."

The FTC also debunked another widely circulating Internet rumor: "While the telecommunications industry has been discussing the possibility of creating a wireless 411 directory, according to the FCC, even if a wireless 411 directory is established, most telemarketing calls to cell phones would still be illegal." For more information about the wireless directory proposal, click here.

For more information on the FTC's Do Not Call Registry, including instructions for registering a phone number, click here.

Nearly illegible fine print ... in the next day's newspaper

In yesterday's Consumer Watch column about the fine print in auto ads, I responded to a complaint about an ad in last Monday's Philadelphia Inquirer.

I wrote that "mouse type" in print ads and the broadcast equivalent, fast-talking disclaimers before or after a radio or TV commercial, were longstanding problems in the marketing of autos (as well as other products), and had prompted numerous actions over the years by the Pennsylvania attorney general and others who monitor the marketplace. I concluded, though, that I'd seen far worse examples than what Dale Shaw complained about: the small-type phrase "with $2,000 cash or trade-in" alongside a $17,990 price for a used 2006 Volkswagen Passat.

Leave it to an eagle-eyed reader to point out one of those worse examples - in at least some editions of today's Philadelphia Inquirer. (In my paper, it ran on a page marked "PA F1.")

The Hopkins Ford ad lists a number of cars, and in big type touts an offer of zero-percent financing "plus $1,000 drive on us bonus cash or we'll pay for your gas up to 2007.*"

And what does that "*" refer to? Donald Bandera of South Philadelphia called to complain that he had no idea, because the footnote appears not only in tiny type - much smaller than the Passat ad's 8- or 9-point small print - but also in white print on a blue background.

I could barely make it out myself, with eyes that are 20-odd years younger than Bandera's, but finally found good enough light to focus: It's a disclaimer that says the no-interest financing is "in lieu of rebate" but compatible with the "drive on us" offer, and that explains how the gas offer works.

Printing in color isn't the easiest thing on newspaper presses. Perhaps this ad wasn't meant to be nearly illegible. If I get a response from Hopkins or our ad department, I'll post it here.

For now, it's worth noting that Bandera assumes otherwise, and it's hard to argue with his determination to exercise a healthy skepticism in a competitive market.

"I’m looking around for a car, but I’d never buy one with an ad like that," he told me. "As soon as I see that, that’s like a flag. "I don’t know what they’re trying to hide."

Maybe nothing, or at least nothing surprising. But if Bandera can't read it, even after trying a magnifying glass, how would he ever know?

Guess what just disappeared from Stevens' telecom bill

Senate Bill 2686, which Senate Commerce Committee Chairman Ted Stevens (R., Alaska) has already dubbed the Telecommunications Act of 2006, has grown considerably since the original, 135-page version was introduced May 1. The latest working draft, unveiled today, is 25 pages longer.

But even though it goes on for nearly 160 pages, one section has suddenly vanished without a trace: the "Sports Freedom Act," taken from a bill introduced by Sen. John Ensign of Nevada, one of Stevens' Republican colleagues. That was the section that would bar cable companies everywhere from doing what Comcast Corp. does with its Philadelphia SportsNet station: refusing to provide the local sports telecasts it controls to competitors, relying on a loophole in the Cable Act of 1992.

In May, Stevens said: "While satellite companies are barred from hoarding exclusive sports programs, the so-called terrestrial loophole does not impose the same mandate on cable companies. As a result, through the acquisition of regional sports networks by cable operators, competition with satellite providers has been stymied."

Last week, Comcast VP David L. Cohen told a Senate committee that since Comcast doesn't treat any other community the way it treats its home town, the issue wasn't something "that rises to the level" of requiring congressional attention. In other words, Comcast told Congress to give it a pass. (Click here to read more of what Cohen said.)

I guess his arguments were persuasive. In the latest version, the Sports Freedom Act was replaced with an expanded section on a subject closer to Stevens' heart: ensuring that Alaska and Hawaii get adequate satellite-TV service.

Juneau wins. Philadelphia loses. I'm looking forward to hearing Sen. Stevens explain why.

Cutting costs: Saving on lodging, bank fees, and heating oil or propane

Readers continue to share their money-saving tips, which I invited last month in a Philadelphia Inquirer column on free directory assistance. As long as they do, I'll continue to post them here or write about them in the newspaper, as I did in Monday's Consumer Watch column and Consumer Inq posting and in Tuesday's posting on the Philadelphia overstock outlet, Jomar.

Some of the best advice is informed by particular knowledge consumers can acquire on either side of the sales counter, or from the experiences of friends, relatives or neighbors.

Here's one from David Muff, a former hotel manager who hails from Havertown:

When booking hotel rooms, I like to save money by asking for a cheaper rate than the one just quoted to me. As a former hotel manager, I know that reservationists and front-desk clerks are flexible in the selling price when it appears the hotel may not sell out. I’ve had front-desk clerks come down in price three times before accepting their offer. It doesn’t hurt to ask for a cheaper rate. If it appears you are hesitant in accepting their initial offer and the hotel knows it needs to sell that room, then they will most likely discount the room to make that sale.

Mike Morris, also of Havertown, is a lifelong credit-union member who says he can't understand why more people don't take advantage of these nonprofit alternatives to banks:

Use a credit union for checking, ATM, and other non-investment cash-management needs. The fees, if managed correctly, should cost little or nothing each month.

I have been a member of the same credit union since I was in grade school (through my dad's employer - Bell Telephone). I am now in my mid-40s. Over that entire time, my fees have probably totaled less than $100 (for some bounced checks due to sloppy record-keeping when I was much younger). I use the Credit Union for ATM service, checking, money market savings, CDs, and VISA cards, all provided at no charge.

Given the recent relaxation of the rules for credit-union membership, I can't understand why anyone would use a regular bank that beats you up with fees, minimum balances, etc.

After last fall's spike in energy prices, these two suggestions for saving money on heat - one for those who heat with fuel oil, the other for those who use propane - seem timely even in June.

From Victoria Matishen, of Somerdale:

We have belonged to NJCAOG - New Jersey Citizen Action Oil Group - for over 20 years. This is a cooperative of independent home heating oil distributors in this area. We have saved at least 10 cents per gallon of heating oil during that time. This past winter our two deliveries totaling 310 gallons saved us 15 cents a gallon, or $46. We were assigned one distributor. Service has been great and we've never run out of oil.

When we first joined, annual membership was $25. It may be as high as $40 now. Since we are now seniors, our membership is only $15. Either way, one can save money with just one delivery.

There is also an incentive plan for recommending new customers, so if 50 or so of your readers mention our name we'll have free membership for the rest of our lives. (Just kidding.)
For me, there is the added attraction of supporting small, independent businesses.

[Thanks, Victoria. There are similar co-ops in Pennsylvania. Two I know of are PIRG Fuel Buyers and the Energy Cooperative.]

From Jeff Carlow, of West Chester:

Hi Jeff. Interesting article on saving some money on 411 calls today. I found a way to save some money, but it is more of a long-term commitment.

I bought my house 8 years ago. Our house is heated by propane, and a 2,ooo-gallon tank was installed when it was built. We signed a bunch of papers for the tank to be installed with the obligation to buy the propane from Amerigas in Malvern.

I recently was speaking with a neighbor who bought out his lease on the tank. I was surprised and didn't know that was an option. He explained to me that if you lease your tank you can't go out and shop for the best propane price. If you wanted to shop the price per gallon you had to have proof that you owned the tank. I decided to call a few propane distributors for price and regulations on ownership. I found that I could save between 49 and 54 cents per gallon. Take that savings times the number of gallons you use per year and, for me, I figured that payback would happen in approximately 3 years. You also have to have proof that you own the tank. There must be a law or agreement among the propane distributors not tamper with each others' customers.

You've got to bite the bullet and buy out the lease. Amerigas puts the tank on a 30-year depreciation schedule, which is a joke. They told me the tanks can last 50 years. The tank cost $2,100 installed, and the buyout price was approximately $1,600 after 8 years. I told them that the depreciation schedule was ridiculous but they pulled out my documentation from 8 years ago that showed what I had signed up for. They also told me to check if my homeowners insurance would go up. It didn't. They also told me I'd be responsible for any problems with the tank once I owned it. Understood.

I bought out the lease and they quickly quoted me a 50-cent reduction in my per-gallon rate. It was a 25% savings ($2.09 lease price versus $1.59 owner price per gallon). They also sent me proof of ownership of the tank. I called around and got a better price and called Amerigas to see if they could beat the rate, and they offered an additional $.02 off. I'm still with Amerigas but now how some open-market leverage on costs.

Amerigas doesn't advertise this buyout option, as best as I can tell. They are making a premium off their lease customers. You bought and paid for that tank with that premium after 2 to 3 years. Granted, they have complete service/support responsibility for the tank. The rest is gravy for them over the next XX years. I'll be saving at least $ 500 to $700 per year. I'll be staying in my house a long time, so the buyout made sense for me.

I also learned that you can call Amerigas in June or July and lock in your rates for the winter. Again, I don't think they advertise this opportunity. [One warning: Unless it allows your rate to float down if prices decline, a rate lock can work against you as well as for you.]

I look forward to other tips from your readers! It was a good tip from my neighbor.

Got a comment on this tip or others, or on anything else consumer-related? Use the "Comment" button below, and remember to fill in the "word verification" box.

Comcast's special gift to Philadelphia?

To we Philadelphia sports fans who count ourselves as captive customers of Comcast, there always seems to be an awkward subtext in the way the company defends its most glaring use of market power: its refusal to share its dominant Philadelphia sports station, Comcast SportsNet, with its satellite competitors.

With the cable and Internet markets currently under scrutiny in Washington, Comcast had another chance today to explain its position. It came during a Senate Judiciary Committee hearing this morning on the future of telecommunications, when Chairman Arlen Specter asked his Philadelphia homeboy, David L. Cohen, how Comcast's sports programming would be affected by S. 2686, the omnibus telecommunications bill sponsored by Specter's colleague and fellow Republican, Sen. Ted Stevens of Alaska.

The Senate Commerce Committee is considering the bill, and Stevens is its chairman, so it stands as good a chance of passing this year as any telecommunications bill - which is not to say that it's a given, with some of the nation's most powerful companies pushing Congress in conflicting directions.

So far, most of the public debate has centered on two issues: "Internet neutrality," which the bill currently sidesteps by ordering an FCC study, and expedited local franchising for phone companies such as Verizon that want to compete with cable by offering television along with Internet and phone service, which the bill includes.

But the bill also includes a section known as the Sports Freedom Act, intended to prevent Comcast and its cable counterparts from monopolizing local sports telecasts through exclusive deals as Comcast has for years in Philadelphia.

Cohen, chief of staff to Ed Rendell when he was Philadelphia's mayor, is now making millions of dollars a year as Comcast's executive VP. As I know personally from my days on the Philadelphia Inquirer's city desk staff, Cohen is a true master of spin, able to put forward the best possible case for just about any point he argues. It can't hurt that he's probably the smartest guy in the room just about any place he shows up.

His talents were abundantly on display today as he addressed the big national issues. But when it came to SportsNet and Comcast's decision to keep it exclusive in Philadelphia, even Cohen couldn't escape the inevitable awkwardness.

Cohen started with the usual arguments - that Comcast withholds SportsNet because it's legal under the "terrestrial exemption" to the 1992 Cable Act's program-access rules; that it only withholds SportsNet from the satellite companies, not RCN in the small corner of the region it serves as a cable "overbuilder"; and that one of the satellite companies, DirecTV, has an exclusive deal with the National Football League for a package of out-of-town games known as the NFL Sunday Ticket, which Cohen called "the key and most important exclusive sports programming that exists today."

Then Cohen added one more justification - not for Comcast's practice, but for why Congress should, well, give it a pass: Philadelphia is the only market where Comcast keeps local sports away from its competitors.

That's true: Comcast offers satellite companies SportsNets in the Washington area, Chicago and San Francisco (although sometimes on terms that provoke other complaints from the satellite companies).

Cohen didn't bother to say why Comcast SportsNet in Philadelphia is an exception - only that its Philadelphia strategy "has not proved to be a dominant model." Then he added: "My submission to this committee would be that it is not something that rises to the level of the need for legislative reform of the program-access rules."

So that's Comcast's bottom line: We only treat our hometown sports this way, so leave us alone.

For another take on the Senate deliberations, see media activist Joshua Breitbart's blog. For a economics-savvy explanation why saying, "Yeah, but what about NLF Sunday Ticket?" invokes an apples-and-oranges comparison, see Ruby Legs' blog posting: Welcome to Phillyville: Comcast, the Great Equivocator.

Cutting costs: Owner touts his local overstock chain, Jomar

Yesterday's Consumer Watch column on reining in expenses mentioned Mark Davidsaver, the aptly named Illinois software developer (for diesel engines and transmissions) who runs the "YourMoneyPage" website as a hobby.

Davidsaver, like many Internet hobbyists, sells ads for his site, so in that sense he's also a businessman. He wasn't the only one I heard from.

In the spirit of localism and fair play - I've previously pointed readers to Overstock.com as a source for savings - here's an e-mail from Mark Segal, a local businessman whose six-store chain, Jomar Inc., also sells overstocked items. The difference: You can see and touch his stores' merchandise. You don't have to rely on Web-site photographs and descriptions, or pay for shipping.

I haven't been to Jomar yet myself, but with two teenage daughters, I intend to investigate. (One of Jomar's rare mentions in our newspaper archives referred to it years ago as a favorite of Marjorie Margolies Mezvinsky, the former newscaster and congresswoman who now runs Women's Campaign International.)

Mark Segal didn't drop any names - he just told me that he was proud of his company and the savings it offers to consumers. One of the ironies of the modern marketplace is that the best bargains may well be at places that you've rarely or never heard of, because retailers have to build marketing costs into their prices.

Segal writes:

There is only one true factory outlet store left in this city and that is a six-store chain called Jomar Inc. We buy everything a department store or catalog company does not sell, or everything a customer returns to that particular store, and sell it for a fraction of the original retail price.

Did you ever wonder what happens to that dress shirt your wife bought you at Macy's that was not quite right? Well, when your wife returns it, it does not go back to inventory; it goes to Jomar. [Clarification: Not all of it; Segal says Jomar is "one of maybe four companies in the United States" that get Macy's overstock and returns.]

Bottom line: If you want to buy a $40 department store garment in this city for $5 or $6, every day, Jomar is the only game in town. We carry anything a department store carries plus furniture and fabrics. We are Philly-born and family-owned since 1967.

I understand that our company may not fit into your "little secrets" concept, but after reading your article, my passion for my company, and the fact that we offer the public true value, compelled me to send you this e-mail.

Thanks for your time.
Mark Segal
Jomar Inc.
"Phillys Best Kept Secret"

If you've had experiences with Jomar, good or bad, please feel free to comment by clicking on the word Comment beneath this posting. (Remember to fill in the word-verification box to prove you're not a spammer-bot.)

Cutting costs: Readers' ideas on using the Web, avoiding interest, economizing on gas, and reusing bags, foil and containers

My column in today's Philadelphia Inquirer column focused on a few readers' suggestions for reining in expenses. Here and in postings later this week, I'll share readers' strategies in their own words - with some fixes for the typos and other small errors that seem endemic to e-mail and an occasional bracketed note to clarify a point or respond to a suggestion.

Feel free to use the "Comment" button beneath the posting to respond. Whether you agree or disagree, we'll all benefit from a dialogue. (Remember to fill in the "Word Verification" box at the bottom of the screen - it's necessary to ensure you're a reader, not a robotic spammer.)

From Pat Asher:

Here's my favorite place to save: www.zooba.com. I've always bought books, but this site offers the most recent at $9.95 (no tax or shipping costs). [Note: The Zooba Web site's FAQs says sales tax applies in Pennsylvania, New York and Indiana.] The gimmick is that you have to join and pay the fee monthly, but they'll ship the books as gifts if you want, and at that price it's no hardship to buy a book a month (sort of a pun - the company is a branch of the Book-of-the Month Club). The shipping is also very quick - that's important to me.

From Fred Schumacher, King of Prussia:

A very good way to save $42 every 8 weeks is to cancel home delivery of the Inquirer and read it on the Internet or your local library. [Gee, thanks, Fred. If you didn't get here from there, our Web address is www.philly.com.]

From Tevis M. Goldhaft, Haverford:

I am now 92 years old, and when I got married in 1935 my father said to me, "Never pay interest; collect interest " To simplify it, you never buy anything you can't pay for right then and there.

I've had an American Express card since 1972 and an Exxon card since they were first issued. I buy things with them, pay the bill when it is tendered, and over these many years I have never paid either issuer any interest.

From Steve Sherman, Audubon, PA:

My wife and I have worked out a couple of things which promise to save us $30-$35 a month on gasoline at current prices. ...

The first thing we've done to save money is to switch who's using which cars. We have an old '95
Ford Escort which my son drives to school and work, and because he's a cautious driver, he gets 25-26 mpg on the thing, so that's fine. But my wife was driving her '03 Ford Taurus station wagon (6 cyl.) 22 miles round trip to work, getting about 16-17 mpg, and I was driving our recently-acquired '03 Hyundai Accent (4 cyl.) 4-5 miles round trip to my part-time job (I'm
semi-retired), getting 24-26 mpg. By switching cars, we figure to save $25-$30 a month on gas, we hope.

Also, I recently applied for and received a AAA Visa card, which gives a 3% rebate on gas purchases. (Some gas companies, e.g., Lukoil, offer a bigger rebate on cards which they sponsor, but often only at their own stations. The AAA card is good at ALL stations.) That figures to save us perhaps another $7 a month or so. So we hope to be seeing some savings on our gas purchases this month.

Gene Apice, Northeast Philadelphia, phoned with a similar suggestion:

Apice, a retired police sergeant, signed up for a Hess Visa that offers 10 percent back on gas purchases for 90 days, then switches to a 5 percent rebate - still on the high end for a cash credit-card rebate. To take maximum advantage of the rules, he first got one for himself and requested cards on the account for other drivers in his household. After three months, he had his wife sign up and also request cards for other drivers. Then he'll have his son do the same. With five drivers and four cars, the family pays as much as $500 to $800 a month for gasoline. Saving 10 percent is worth $50 to $80 a month, and even saving half that in the long run will help.

From Joan Mill, of Phoenixville - who says she considers these strategies "intelligent thinking" rather than "being cheap":

* I use the plastic grocery bags in my wastebaskets; haven't bought small bags in years.
* I re-use aluminum foil that isn't too soiled.
* I wash out zipper freezer bags and re-use.
* I save all aluminum containers to freeze my excess meals.