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Service interruption protections vary by nation

Posted On: Jun. 3, 2007 12:00 AM CST

Liabilities for service disruption related to telecommunications companies differ from country to country, according to Emily Freeman, London-based executive director of technology, media and cyber risks for Lockton International, a unit of Kansas City, Mo.-based Lockton Cos. Inc.

The telecommunications industry in the United States enjoys broad federal antitrust protection, she said in an e-mail. "In 2004, the U.S. Supreme Court ruled there were limits to when consumers can sue over inadequate phone service, in an antitrust case worth potentially billions of dollars among competing telecom companies," she said.

At issue was whether federal antitrust regulations allow class action lawsuits against utilities such as phone companies. A customer claimed his business was hurt by repeated outages and missed dial tones at his office.

According to Ms. Freeman, the customer argued federal law allows for consumer protection for victims of antitrust violations. "The Supreme Court rejected the argument and effectively continued the barriers for consumers to pursue legal action for service failures or poor performance," she said.

In Europe, the industry does not have this special legal protection and, unlike the United States, the European Union lacks the especially favorable conditions for class actions, according to Ms. Freeman. However, telecommunication companies in the United States and the European Union have much in common with regard to terms and conditions that reject consequential damages and offer "at best service credits" for performance failures, she added.