The city of Jacksonville and AT&T Broadband may finally be on their way to resolving a yearlong dispute over customer service problems, but that won't stop the statewide investigation spawned by the city's complaints to the Florida attorney general.

The latest rapprochement comes after a lengthy meeting last Thursday between top Jacksonville officials, including the mayor and the city council president, and AT&T Florida SVP Ellen Filipiak. According to a Jacksonville city official, the two sides have reached a verbal agreement that would resolve the city's demands for restitution to customers but as of press time had not yet completed a written agreement. Details will not be available until that is accomplished.

The city has said it wants all customers to receive a cash reimbursement, while AT&T's policy in similar cases usually includes coupons or other noncash offers. In this case, AT&T had also offered to make a charitable contribution rather than set the precedent of reimbursing all customers with a cash refund.

The meeting followed another flare-up caused by AT&T's announcement on June 1 that it planned to raise rates 7% effective July 1, prompting the city to challenge the MSO's methods and even its right to raise rates when customer service complaints are still far above average. AT&T voluntarily withheld rate increases for 17 months while it resolved issues, but June 1 marked the end of that period. AT&T has said it will consider postponing the rate increase; it is not known yet whether that is part of the agreement.

Meanwhile, the city's frustration led to a request for a state investigation into possible fraud by AT&T, and Broward County is accusing the MSO of ignoring poor and minority communities when it comes to upgrades.

The high-profile problems couldn't come at a worse time for AT&T, now deep in the process of trying to get approval from local franchise authorities to transfer control to the proposed AT&T Comcast.

The problems with Jacksonville began last year when the city was flooded with complaints after AT&T changed billing systems, call centers and equipment. AT&T made some changes, but city officials aren't satisfied with the results or with the MSO's resistance to give every customer a rebate as restitution.

The MSO only added insult to injury, they say, when it advertised a rate increase in the midst of the highly charged situation. A strongly worded May 30 letter from Mario Taylor, the director of regulatory and environmental services, to Filipiak outlined the problems, including a complaint rate that is still 500% above normal. Other areas of noncompliance crossed in the mail with AT&T's notice that it was raising rates. Taylor did not see the notice before a newspaper ad appeared that weekend.

The statewide probe began when Jacksonville officials asked Florida Attorney General Robert Butterworth to investigate the MSO's billing practices. After going through Jacksonville's documentation and determining that AT&T's billing was similar throughout the state, the attorney general's office expanded the investigation.

?We're disappointed that they're continuing with the investigation, although we're not surprised by the extension to include South Florida because substantially the billing practices mirror each other,? said AT&T spokesperson Maureen O'Neill.

Assistant Attorney General David Lewis said the decision first to conduct an investigation and then to expand it was based on a high number of complaints combined with a persistent pattern of the same types of complaints. Lewis said the list includes ?people being billed twice in a month, people being billed for more expensive converter boxes than they actually had in their package [and] a persistent pattern of people who've terminated their service and continued to be charged?. For us to issue an investigative subpoena we have to have reason to believe a violation has is or has occurring. We have reason to believe it has occurred in the past and is ongoing.?

Among other remedies, AT&T could be required to change its billing practices, pay redress to consumers and pay a fine to the state of Florida. Lewis said there is no reason to believe at this point that the investigation will spread to other MSOs, even though billing practices may vary little from company to company.

In Broward County, the County Commission has directed its staff to negotiate with AT&T for an upgrade of services within its cable systems as a condition for the transfer. As for Broward's claims that AT&T is deliberately ignoring minority and poor communities during its upgrade, O'Neill said, ?Our position on that is that the county took a look at a very small part of our franchise area?. We don't believe there's any foundation to them pursuing that path because of data we've supplied to them.?

O'Neill said a broader analysis by the company shows ?no significant difference in income or racial diversity of upgraded versus nonupgraded.?

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