For 4,000 teleservices workers and one Ohio congressman, MCI's confirmation that it will close three call centers and cut staff at three others hit uncomfortably close to home.
It hit especially hard in Niles, OH, site of one of the centers to close and home to Democratic Rep. Tim Ryan, one of seven U.S. lawmakers to vote against the Do-Not-Call Implementation Act of 2003.
MCI's cutbacks represent the largest workforce reduction yet to be linked to the national no-call list. The cuts represent 7 percent of MCI's workforce and are expected to occur in May and June.
“As a result of the impact of federal and state do-not-call laws, as well as ongoing telecom market trends, we need to take this action in order to improve our overall cost structure,” the company said in a statement.
Following confirmation of the cuts by MCI on March 29, the Indiana attorney general's office revealed that the telecommunications firm would pay $100,000 to settle complaints that it violated Indiana's no-call law.
The closures cost Ryan's Ohio district 650 jobs. The other call centers to close are in Denver, with 950 jobs, and Phoenix, with 850 jobs, while staff cuts will take place at MCI call centers in Alpharetta, GA; Colorado Springs, CO; and Springfield, MO.
For Ryan and others in Niles, the layoffs cut doubly deep because MCI's president/CEO, Michael Capellas, is a native of Warren, OH, which neighbors Niles and is in Ryan's district.
Ryan spokesman Pat Lowry declined to comment to DM News about the MCI closure. However, last week Lowry told the Akron (OH) Beacon-Journal that Ryan was “disappointed” by the closing and that he was in talks with Capellas to “try to turn this situation around if we can.”
Lowry told DM News that Ryan's opposition to the national no-call list stemmed from his concern about jobs for his constituents.
“There are about 2,000 jobs in our district in the telemarketing area,” Lowry said.
Another congressman who voted against the no-call list implementation bill, Rep. Tom Tancredo, R-CO, represents a district just south of Denver. A Tancredo spokesman said the congressman voted against the bill because he thought telemarketing should be regulated on the state level.
Other House members who voted against the bill included Reps. Jeff Flake, R-AZ, whose district lies near Phoenix, and Ted Strickland, D-OH, whose district neighbors Ryan's to the south.
House members representing districts affected by the closures, but who voted in favor of the no-call list, included Reps. Diana DeGette, D-CO, whose district covers Denver, J.D. Hayworth, R-AZ, and Ed Pastor, D-AZ, both of whose districts encompass parts of Phoenix. Their offices did not return calls for comment. The bill passed unanimously in the Senate.
Not everyone buys MCI's claim that the no-call list is at fault for the cutbacks. MCI filed for Chapter 11 bankruptcy in June 2002 as WorldCom. MCI listed debts of $65 billion in its filing, according to news reports.
The company has faced allegations of $11 billion in fraudulent accounting. Former chief financial officer Scott Sullivan pleaded guilty to federal fraud charges last month. The company dropped the WorldCom name in 2003 and plans to emerge from bankruptcy this month.
A number of organizations are using the no-call list as an excuse to cover for financial shortcomings or offshore outsourcing, said Art Schoeller, a CRM and teleservices expert with The Yankee Group, Boston. Many that accepted grants and tax incentives to open call centers are concerned that they may have to pay that money back when they close those facilities.
“There is some truth in MCI's statement, but I suspect much more is below the surface that is simply cost cutting and the DNC is being used for political cover with the local communities,” Schoeller said.
Some jobs are being lost because of the no-call list, he said, but not as many as the industry claims.
“We continue to see a few closings here and there but I think this is being blown out of proportion,” Schoeller said. “I am saddened any time jobs are lost, but in this case I am weighing in on the side of consumers.”
MCI, the No. 2 long-distance carrier in the United States, has faced regulatory trouble in the past involving its telemarketing, Schoeller said. It faced accusations of slamming and cramming — which refer to the illegal practice of switching phone service or adding new services without a consumer's permission — from the Federal Communications Commission in the late 1990s. MCI WorldCom in 2000 agreed to pay $3.5 million.
The Indiana fine agreed to by MCI is the largest imposed since the state's no-call law took effect in January 2002, Indiana attorney general Steve Carter said. The office received 90 consumer complaints about MCI telemarketing calls in two years.
In addition to paying the penalty, MCI promised to abide by the state's no-call law in the future and keep up to date with the state's growing no-call list.
An MCI spokeswoman said the illegal calls resulted from an “implementation error” in the company's compliance program in the state. She said MCI cooperated fully with the attorney general's office but declined to give further details about the nature of the error.
“MCI takes compliance with state requirements very seriously,” the spokeswoman said. “We have many practices in place to ensure such compliance.”
Indiana's no-call law differs from the national law, according to the state attorney general's Web site. Though it exempts real estate and insurance agents, charities that do telemarketing in-house and newspapers, it contains no exemption for existing business relationship calls. Federal law allows calls to consumers to whom a telemarketer has made a sale within the past 18 months.
Indiana's no-call list has about 1.5 million telephone numbers. The state has assessed $413,825 in civil penalties under the no-call law and entered settlements with 141 telemarketers since the list took effect.
