Two former Comcast installation subcontractors are accusing the cable giant of using the promise of more work to trick them into spending more money on equipment, people, and real estate — all for the benefit of two larger subcontractors who were allegedly allowed to manipulate and erase negative service reports from customers.
According to the complaint [PDF] filed last week in a federal court in Pennsylvania, the two subcontractors were among the regional providers that successfully bid for Comcast’s business in 2010.
As part of that process, claim the plaintiffs, Comcast urged winning contractors to “ramp up” their operations in expectation for the work to come. One plaintiff says it purchased 20 new vehicles, trained new staff members, and invested in new warehouse space. The other plaintiff opened six offices and a dispatch center in response to Comcast’s ramp-up request.
What the plaintiffs say they didn’t know is that Comcast had already begun the process of slashing its total number of regional subcontractors, from 176 to 39 between 2009 and 2012.
“Comcast had no intention of working with Plaintiffs for the long haul,” reads the complaint, “instead, it planned to allocate the market for cable installation to a handful of chosen subcontractors.”
In May 2012, both plaintiffs got the bad news from Comcast that their business relationship was over. They accuse Comcast and two other contractors of a “conspiracy,” in which the plaintiffs invested “millions of dollars in human and physical capital that would be absorbed for pennies on the dollar” by Comcast’s co-defendants.
One co-defendant was able to purchase a plaintiff’s fleet of service vehicles for only ten cents on the dollar, alleges the complaint.
The plaintiffs also say that Comcast alerted the co-defendants that these smaller companies were going to have their contracts canceled so that the bigger companies could get a head start recruiting techs.
“Comcast planned to have smaller, local companies bear the brunt of expenses building infrastructure for cable and Internet services in their home communities,” alleges the lawsuit. “[O]nce the local markets were established, Comcast planned to replace smaller installation companies with larger companies that offered less compensation to installers and thus passed on lower costs to Comcast.”
In addition to the alleged damage done directly to the plaintiffs, the lawsuit says the Comcast scheme had far-reaching consequences for the industry: consolidating the market for installation services; “flattening wage rates and employment choices” for individual techs; and creating an industry standard of “over-worked ‘independent contractors.’”
While Comcast was apparently saving money through its trimmed, lower-cost subcontractors, the complaint contends that “Comcast has never even bothered to claim that the consolidation of the cable industry would lower costs for consumers.”
FUDGING THE NUMBERS?
The lawsuit also accuses Comcast of allowing the co-defendant contractors to manipulate the company’s service tracking system.
That system, Cable Data, retained metrics on subcontractors. Low-scoring providers could be penalized millions of dollars in chargebacks, according to the complaint.
However, the plaintiffs allege that this system “was easily corrupted” and that larger subcontractors, like the co-defendants, “could view and change the information stored in Cable Data.”
The lawsuit explicitly alleges that one co-defendant used this special access to erase “evidence of a significant number of service calls.”
These larger subcontractors were also allegedly allowed to encourage customers to contact them directly if there was an issue, thus reducing the number of negative reports on Cable Data.
As a result, claim the plaintiffs, the co-defendants benefited from “wholly inaccurate” metrics while smaller subcontractors paid huge chargebacks to Comcast because they could not manipulate the data.
WHERE’S MY EQUIPMENT?
The plaintiffs allege that Comcast also had a “spasmodic” system for tracking equipment, resulting in plaintiffs paying hundreds of thousands of dollars to Comcast for supposedly missing equipment even though these devices “had been sent out for repair and was working properly in customers’ homes.”
Meanwhile, the co-defendants are accused of misappropriating and reselling thousands of dollars worth of Comcast equipment.
The lawsuit, which seeks damages of at least $750,000, alleges Conspiracy in Restraint of Trade, a violation of the Sherman Act, along with alleged violations of state anti-trust laws in Maryland, Virginia, and West Virginia.
A rep for Comcast tells Philly.com about the lawsuit that “The contracts are very clear about the parties’ rights, and we were not required to do business with these companies.”
by Chris Morran via Consumerist
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