He Said, She Said

Posted: 1/2002

He Said, She Said
Under Revised Rules, Third-Party Verifiers Pitch Live, Automated Benefits

By Peter Lambert

As with many a federal regulation, the Federal Communications Commission's (FCC) first set of anti-slamming rules led to forms of compliance, or perhaps noncompliance, that begat further rules.

The revisions to those third-party verification (TPV) rules devised in late 2000 and  promulgated last spring, have wrought some changes in industry practices, placing greater pressure to comply on long-distance carriers.

In turn, the carriers have issued tougher requirements on their TPV vendors, prompting further innovation in a field. Most participants in the field agree better and better performance is required to hold onto share of a limited, saturated market.

Once-rampant tales of slamming -- the switching of customers to different long-distance carriers without their knowledge -- have been a long time out of the headlines. Thanks to strict enforcement and penalties, "the cowboy days of the mid-'90s are over," says Larry Leikin, vice president of sales for TPV service provider VoiceLog LLC. However. if misbehavior is less in the public eye, he says, "I don't think it's because it's not happening at all."

The persistence of some bad apples led the FCC to revise the rules in 2000 (CC Docket No. 94-129). For example, now a sales representative must be bumped off the phone conversation, once he's made the sale and the customer has been connected with the third-party verifier.

It's the TPV provider's job to confirm the customer understands what he's agreed to purchase, and no cajoling or back-pedaling or any other form of interference from the salesperson is to be brooked during that verification process.

Some in the industry are appealing that rule. They argue the rule unfairly targets smaller agents and resellers that lack technology sophisticated enough to transfer a call to a TPV provider while simultaneously dropping the sales representative off the line.

Among the objectors, VoiceLog is party to a petition to the FCC for reconsideration of the rule based on First Amendment and other arguments.

"We feel strongly the rule is wrong for a host of reasons," Leikin says. "Small companies don't have the wherewithal to transfer while dropping off."

Still, most vendors say, TPV systems that use dial tone modulation frequency (DTMF) systems -- through which the customer uses touch tones to answer automated prompts -- cannot determine whether tones are entered by the customer himself or the sales agent.

"There's no way to distinguish whose touchtone," and so the rule bumping the seller off of the TPV call, to remove the chance for such confusion, will probably stick, says Tim Duggan, assistant vice president of sales for TPV provider Advanced Data-Comm Inc.

Notably, while an automation system like DTMF has created such a dilemma for one segment of the TPV industry, part of the new rules included formal acceptance by the FCC of automation as a valid and legal method to verify phone service sales. And, as with most forms of automation, that validation has opened the door for increasing competition to provide verification at lower costs.

"Over the last year or so, automated verification has found greater acceptance and showed its benefits, including consistency," says Travis Brown, director of account management for the Speech Solutions line of business, formerly PriceInteractive, of iBasis Inc. "With automated systems, no superfluous information can be injected into the transaction."

Automated, per Customer Call Flow and Verification Chart

Source: iBasis Inc. (www.ibasis.com)

Warm Body, High Cost?

Like a good King Solomon, the FCC split the difference. The commission approved automation, but it allows automated systems to be applied only if the customer can zero out at any time to be transferred to a live verification call center attendant.

So, on one hand, Brown says iBasis' automated speech recognition system can cut the $2- to $5-per-transaction costs of live verification by half and could eliminate the cost altogether. But on the other hand, Duggan claims the cost of automated and live is "closer than before," in part because about 35 percent of callers choose live operators anyway.

The selling carrier also may prefer to use live operators, because it provides consumers with the comfort of a human voice, and because of concerns about compliance with state rules.

Each state requires unique information be imparted to or gathered from the customer.

Such rules, first promulgated by California and Texas, and more recently by Florida, Illinois, Kentucky and Tennessee, may or may not be a good fit for automated systems, say several TPV providers.

In Advanced Data-Comm's case, the automation system can use automatic number identification (ANI) to recognize when a caller is from a state with additional compliance requirements. It then automatically can push the call to a live operator "to deal with the more complex verification," says Duggan.

For one major carrier contract recently won by Advanced Data-Comm, this ability to humanize for state-by-state compliance "was a requirement of the contract. The live operator advantage is that he or she can branch to capture specific information required per state."

iBasis' Brown disagrees. He says the automated system can best respond to the need for personalized response. Intelligent routing of calls, special information inquiries and high-volume transactions are exactly the strengths of iBasis speech solutions, he says.

"There are limits put on what a live operator can say, so what we've done is to apply our wide knowledge of federal and state rules into our data-driven schema," says Brown.

While the automation addresses routing calls by state geography, "our system enables the carrier to hot-cut transfer the customer's call and associated data to our system via two, parallel access lines to our facilities," Brown explains. "We then create a call flow that is specific to that customer, then play it to him within the speech recognition process."

For example, Brown says, if the customer finds during the TPV call he has questions regarding the service, which only the seller -- not the verifier -- is allowed to answer, the iBasis system can hot cut him back to the sales agent.

"Or we can hot cut from the speech recognition system to a live operator for customers not comfortable with machine interactions," Brown says.

That kind of flexibility has added up to "closure rates that exceed what you see with live operators, and that was not something we were sure we could accomplish," he adds.

Verification Process Chart

Source: iBasis Inc. (www.iBasis.com)

Paper Trail

In the end, carriers buying TPV services need proof to settle disputes, and that requires the word of a third party and recorded evidence.

Duggan says the old audiocassette tape technologies yielded little better than 55 percent to 60 percent retrieval rates and too often left the carrier high and dry.

Now, through substantial investments in digital recording technologies, "over the past two and a half years, we've gotten to over 99.5 percent," Duggan says. "And with all the fines being levied, our customers say this is no longer a value add but a must."

Advanced and other vendors also have invested in migrating from end-of-the-day, batch transfers of records to real-time data transfers. In a market that affords TPV providers little room to grow in terms of new customers, this kind of recording paves the way for transcription services and daily or weekly reporting services, each with an additional price tag.

"There was a time when the verification rate suffered because the customer was not clear enough about the offer," Duggan says. "When the sales rep makes a sale and sends us the record of sale data in real time, that has helped us reduce our agent talk time and to improve the accuracy of orders for the purposes of provisioning by the carrier." In addition to supplying proof of purchases in case of dispute, records of transactions have been used by Advanced Data-Comm carrier clients to reduce confusion and increase completed sales.