Promotions For Bundled Internet And Phone Services Under Scrutiny

Attorney General Spitzer today announced that his office has reached an agreement with
a leading upstate telecommunications company to change the way it advertises for Internet and phone services.

Frontier Telephone of Rochester, Inc., and its various affiliates, all subsidiaries of Citizens Communications Co., resolved an investigation into misleading advertising and marketing tactics.

"Fair competition between telecommunication companies, satellite providers and cable companies is advanced by accurate and complete advertising practices," Spitzer said. "Better disclosures about the true cost of services also will protect consumers from being over billed or locked into contracts they don't want or understand."

Spitzer's office raised concerns that a number of Frontier's direct mail promotions, newspaper and radio advertisements and billboards misled consumers about promotional offers.

Specifically, between January 2004 and May 2005, Frontier promoted "free" months for its DSL ("digital subscriber line") service - a type of high-speed Internet service. Spitzer's investigation revealed that the ads failed to disclose conspicuously that in order to obtain the free DSL, consumers were required to subscribe to Frontier's telephone service - a practice known as "bundling" - for at least eight months. In addition, the ads failed to disclose that the required telephone service, "Frontier Choices", included special services such as voice mail, call-waiting and three-way calling, making it significantly more expensive than basic telephone service.

Similarly, in its offer of "free" unlimited long distance telephone service, Frontier failed to conspicuously disclose that the offer was conditioned upon a consumer subscribing to Frontier's DSL service and the costly "Frontier Choices" phone package.

In resolving the matter, Frontier agreed to inform all customers who subscribed to either promotion between August 1, 2004 and May 15, 2005, that they could discontinue Frontier telephone service, without penalty, maintain their current DSL monthly rate, and receive a $17 per month credit for the remaining term of their contracts. This applies to all customers with an unexpired contract as of December 31, 2005.

In addition, with respect to consumers who cancelled their subscription to either of the promotions within three months of subscribing to them, Frontier agreed to make refunds of $17 for each month of service.

Frontier also agreed to provided a dedicated toll-free telephone number, (888) 281-7490, for consumers to speak directly with a company representative about eligibility, to obtain a claim form, and ask questions about refunds and credits.

It is estimated that if all consumers eligible for restitution under this agreement submit claims, the total amount would exceed $300,000. In addition to consumers in Monroe County, the counties with individuals who may be affected by this agreement include: Herkimer; Broome; Oneida; Cortland; Yates; Essex; Warren; Jefferson; Fulton; Lewis; Dutchess; Orange; and Chenango.

Frontier also will pay $80,000 in civil penalties and costs.

The subsidiary companies of Citizens Communications Company are: Frontier Telephone of Rochester, Inc.; Ogden Telephone Company; Citizens Telecommunications Company of New York, Inc.; Frontier Communications of New York, Inc.; Frontier Communications of Sylvan Lake, Inc.; Frontier Communications of AuSable Valley, Inc.; and Frontier Communications of Seneca-Gorham, Inc.

Last May, Spitzer's office resolved a similar investigation into the promotional representations of Time Warner Cable with regard to its bundled cable and Internet services.

Individuals seeking more information about the agreement with Frontier are encouraged to contact the Attorney General's consumer help line at (800) 771-7755 or go to his web site at www.ag.ny.gov.

This investigation was conducted by Assistant Attorneys General Benjamin Bruce and Denis Charlesworth of the Rochester Regional Office.

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