AT&T to Verizon: There Is A Lawsuit For That

After weeks of taking the hit, AT&T finally responded with a lawsuit against Verizon for its misleading advertising concerning AT&T wireless service. In the ads "There Is A Map For That", although Verizon put a tiny line underneath its slogan saying "Comparison based on square miles covered with 3G. Voice and data services available outside 3G coverage area", it is still very insignificant in front of AT&T's 'blank' coverage on the 'map'.

Introduction
Below is a link to Verizon's new ads:
1st Ad: (Samsung)
Description: Guy walks through campus with Verizon Wireless phone and plays Rock Band. Guy with AT&T phone doesn't have coverage so he can't use his apps.
http://www.youtube.com/watch?v=0WIXFs_g728&feature=related
2nd Ad: (LG)
Description: Girl walks down street with Verizon Wireless phone. She uses Tweet Tweet and makes plans with friends. Girl with AT&T phone doesn't have 3G coverage so she misses the invite.
http://www.youtube.com/watch?v=ECF-tBIK6pw
3nd: Verizon 3G Website:
http://phones.verizonwireless.com/3g/
After getting the big picture of this argument, let's see how Verizon responded to AT&T and how these ads caused Verizon bigger problems.

1. Watch the language in media (e.g.ads):
In Verizon's earlier ads, it said that AT&T customers were "out of touch" where AT&T "3G" coverage is
not available. Besides, in the ads provided above, Verizon displayed a "3G" coverage map attributed to
AT&T with large blank areas (or no coverage) to bolster its misleading message that customers with AT&T service are "out of touch" in large parts of the US. This "out of touch" brought Verizon trouble with AT&T, which was the trigger event of this crisis.
Later, AT&T confronted with Verizon about its equivocal language in ads."By communicating that AT&T customers have no coverage in large parts of the country, Verizon is misleading the public about an essential component of the services AT&T offers," the lawsuit says. Verizon's company spokesperson Jim Gerace said to the Wall Street Journal that "the lawsuit doesn't have any merits. Our ads clearly explain that non-3G coverage is available elsewhere." What Gerace meant by "clearly" was actually a small line.
Verizon removed the words "out of touch" from the ads and replaced with the phrase "Voice & data services available outside 3G coverage areas" in small fonts at the end of the ads (did you see it in the ads above?). This was a bad PR move for three reasons. First off, it did not solve the problem since the fonts were too small for consumers to see. Secondly, it jeopardized its relationship with AT&T for not providing a valid solution. Last but not least, it dragged the crisis to a higher level. Therefore, Verizon's initial crisis response was a failure.

2. Suggested Best Practice
The recommended best practice for Verizon PR people would be: communicating with AT&T in a formal bi-lateral meeting to negotiate a solution. The relationship with competitors may be tricky, yet it is possible. Losing a lawsuit may cost Verizon hundreds of times more than the profits gained from its misleading ads.Their bad decision put Verizon at a very passive position. Verizon might have faced questioning of its reputation and credibility at any time.

3. Legal Consultant in CMT
Responding to a medium like Wall Street Journal is not a wise choice. No matter how terrible AT&T's network is, Verizon cannot set the fire.
The Lanham Act stated clearly that "in commercial advertising or promotion, misrepresents the nature, characteristics, qualities, or geographic origin of his or her or another person's goods, services or commercial activities, shall be liable in a civil action by any person who believes that he or she is or is likely to be damaged by such act."
Verizon's CMT should at least have several legal professionals who can figure out how to deal with these acts. In Verizon's CMP, risk assessment section should include certain legal issues concerning media releases such as TV commercials. Besides, Verizon needs to hold a CMT meeting with its legal professional present to talk about crisis responses.

4. What About Irreparable Loss of AT&T
Besides legal responses, Verizon CMT should also think about possible compensation for AT&T if the lawsuit actually resulted in a restraining order of the commercials and responsibility to AT&T's damages.
The crisis has been going on for a month since the new ads came to the public in October.Verizon have missed many chances to negotiate with AT&T for a better solution than confronting in court. The PR people in Verizon should take action to actively and pro-actively respond to the crisis through communication with AT&T or through mass media.

5. On AT&T's Side
For AT&T people, communicating with Apple is of the utmost importance. Verizon's commercials highly affect two groups of AT&T's stakeholders---consumers and collaborators. Social media provided the consumers and users a great platform to whine about AT&T's wireless service. Verizon reminded them to do so with the commercials.
AT&T needed to use bolstering strategies to ask for wide support from users, potential consumers, and last but not least, its biggest collaborator---Apple Iphone. Rumors said Apple might drop exclusivity with AT&T next year and would possibly collaborate with Verizon to extend carrier options for Iphone customers. AT&T's CMT needs to meet with Apple's decision makers, let them know about AT&T's current situation, and ask for support. It may be a good idea to talk about continuing the exclusivity and offering much 'leeway' for sharing profits.

Closing
It is a battle between AT&T and Verizon. It is also a war between the PR/crisis management team in the two companies. Whoever wins the media and stakeholdes will succeed eventually.

An interesting phenomenon for PR professionals to think about

Infographic of the Day: China's Social Media Map

BY Noah Robischon Mon Oct 12, 2009 at 11:13 AM

The major players in the U.S. social media world can be counted on one hand: Facebook, MySpace, Twitter, LinkedIn. Not so in China, where the country's 300 million online users have a panoply of popular social networks to choose from--and Facebook doesn't even crack the top 10. This map of the Chinese social media landscape was created by the Shanghai-based social network marketing company Zero Degrees.

http://bx.businessweek.com/linkedin-and-business-social-networking/view?url=http%3A%2F%2Ftwurl.nl%2Fsw157h

This article was from Business Week and it provided PR professionals some interesting thoughts.
1. There is never a medium that works everywhere.
2. When an international crisis occurs, PR professionals need to take into account stakeholders in other countries and areas. From what we learn from class, organizations approach stakeholders and try to place a control over information flow by employing media with stakeholders' preferences. Therefore, if P & G has a crisis in the States as well as across the Pacific, PR professionals of P & G will have to use Chinese top traditional media and social media to approach the stakeholders from the other side of the planet.
3. Keep informed about social media development in different areas and countries in case a crisis happens internationally.
4. Facebook and other social media may think beyond providing multiple language versions of facebook. The important message needs to adapt to different cultures as well. So do PR professionals. Dealing with crises in the States and in China may be completely distinguished. Coorperation with local professionals may be a good way to settle crises.

LMK your thoughts!

Amendment to Allow KBR Rape Victims The Right to Sue?

The following article is posted yesterday on http://www.huffingtonpost.com/ about the KBR rape scandal. It may indicate a potential, if not undergoing, crisis regarding the Defense Dept/Republicans. Sadly, North Carolina GOP Sen. Richard Burr was also against the anti-rape amendment by declaring the amendment not helpful for protecting women. Check it out here:

Defense Department Opposed Franken's Anti-Rape Amendment http://www.huffingtonpost.com/2009/10/19/defense-department-oppose_n_326569.html

From the message board under the article, we can also examine how stakeholders actively take a part in new media by providing information, asking for emotional support, etc.

Chevron's Apologia Strategies regarding Ecuador Oil Contamination

It is hard to believe that a country is barely able to defeat a company. However, this is true with Ecuador, the country that has been wrestling with a U.S. Titan of industry---Chevron for 16 years.
This crisis came to my sight because of the Exxon Valdez case. Exxon took immediate responsibility for the spill and now the company still take 1989 Valdez Oil Spill as "a tragic accident deeply regretted by the company". The company also puts together information about the crisis on their website and updates information (the latest update is released on March 19th, 2009).
In contrast to Exxon, No. 1 large corporation in U.S., Chevron reacted differently to the oil contamination problem in Ecuador. The legal battle has been dragged on for 16 years, and thus this yet-on-going crisis has a longer time line than many other ones we may read in this blog. I would like to use a visual to display the stages of this crisis (See Pic1).
From the picture, the time line should be shortened from effective PR practices (such as timely response to crisis), thus possible negative effects of the crisis could have been mitigated (such as apology and bolstering). Moreover, Chevron involved in multiple parties of stakeholders (residents in Ecuador's contaminated areas; customers; Petroecuador corporation; Texaco; Ecuador and U.S. Governments; Board members and employees; U.S. oil industry), which could influence PR practices. For example, news releases should consider victims in Ecuador as the 'utterly important' audience.
Apparently what we learn from this class can explain the oil giant's reactions, due to space constraint, I will discuss their apologia strategies. Chevron attributed the oil contamination to Petroecuador's responsibilities, however, it was Texaco (now Chevron) that did all the operations. Chevron attempted to shift blame (if not the entire blame) to the contamination to Petroecuador. Petroecuador became the scapegoat. Although this nation-owned entity could take some accountability in this case, Chevron is being sued for the contamination it caused as operator and the contamination caused by these operations. The contamination in soils and waters continues after the operations stop and even worsens year after year by mitigating further into soils and groundwater.
Scapegoating is part of the differentiation in apologia prototypes (Hearit), and denial in Coomb's crisis responses. It is even risky to attack the accuser. Recently Chevron published a video indicating a bribery scheme that was to include the sister of Ecuador's President, Pierina Correa, and Judge Juan Núñez, who was then overseeing the case. The ostensible reason Chevron disclosed this video was to convince people to doubt on the integrity of Ecuador's legal system, while its real goal is to attack the accuser and further denying any wrongdoing in oil contamination. "The tapes were the latest turn in a legal marathon over oil contamination left by Texaco years before it was acquired by Chevron". On one tape, Judge Núñez seemed plan to rule against Chevron and increase the compensation to more than $27 billion, making it potentially the biggest environmental lawsuit in history. While this bribery scheme was discussed, the taping action also caught media attention since taping conversations without everyone’s permission is illegal in Ecuador, and trying to bribe foreign officials is illegal under American law. That is to say, the denial strategy may have brought new trouble for Chevron: how they got the video and how they justified the content in the video.
Besides its present strategy of counterattacking credibility of the accuser, we can also see a combination of differentiation and scapegoating in its previous responses. A typical one is Chevron's so called "remediation" back in 1995. With a real purpose to dismiss the lawsuit pending in U.S. federal court, Texaco (now Chevron) offered $40 million to trade for a legal release from Ecuador's government for any environmental claims they had against the company. However, the remediation covered less than 1% of the actual damages with a focus on merely 15% of 916 waste pits Texaco had built. Meanwhile, Texaco sought the release even though it claimed it had not caused environmental damage. This response to the crisis was a bad decision of the management and PR, although Texaco seemed have taken a proactive action on it. Later came the contamination results from the pits Texaco claimed as remediated. No difference from untouched pits, and thus two Chevron lawyers and seven former Ecuadorian government officials are now under criminal indictment for lying about the remediation results. In this case Chevron used a few apologia strategies to look good, while the company failed to maintain authenticity and openness during its PR practices. Other than that, its flawed evidence (such as bribe tapes and remediation measures) was not vigorous and compelling defense (Hearit) for avoiding blame. The trial is expected to have a decision by the end of this year, and we can keep an eye on how Chevron PR will do next.

'Rally4Talley' Throws School Into Potential Crisis

With these "Rally4Talley" signs put up everywhere on campus, the new-student-center debate is getting heated. Shortly after the weekend, N.C. State students will vote to decide whether to renovate Talley Student Center and the Atrium Food Court. The vote may become a potential crisis in the N.C. State community in both short and long terms, which worths our PR professionals to reflect upon.

Potential Trigger Events
The Rally4Talley Campaign will turn into a crisis when the school takes students' votes regarding the renovation. That will affect every aspect of the school including its reputation.
The crisis may be triggered when the student fees start to raise. This renovation is estimated to cost around $ 120 million while the majority of the funding will come from student fees. The first year's fee is $83 while raised to $ 290 in two years.

Flaws Embedded In Campaign Messages
The Rally4Talley campaign informs the public well on the renovation plan and possible costs while one message is overly emphasized. That is the actual long-term increase of student fees. In one of their news releases, only the number of $83 was mentioned ("Talleying the Vote"). This was extremely misinforming by hiding the potential fee increase of $ 290 in three years.
Besides, in the presentation of "Renovation & Expansion Indebtedness Fee Proposal" , increased student fees is presented in the form of "cost to students per day (365 days)" which mad the fees appear as minimal as $0.23. This message was very misleading since a student year was actually much shorter than 365 days. Meanwhile, the presentation provided several avenues to minimize the fees such as Charitable Gifts and Institutional Support, while these avenues were not guaranteed by any official sources of information.
Best Practices and Peer Review (see picture 1) were used in the proposal to demonstrate an urgent need for renovating student centers. However, N.C. State is not comparable to a few universities like Penn State and Purdue which have a larger population than State. Without credible source cited, the diagram was a poor evidence for the plan.
These flaws in campaign messages misled the public and could potentially cause PR crisis to the school as well as to the student body. School's PR professionals will be expected to provide explanation about the equivocal messages. A credible spokesperson like the Chancellor may save the deadlock. If not handled properly, school as well as student body will lose the trust from students, opportunities to get donations, future students, and support from parents and alumni.

Stakeholders' Voice Missing
Three groups of stakeholders should be involved in the decision-making as well as students. They are parents, alumni, and faculty. Previous case studies taught us that stakeholders' opinions were important to an organization and each group of them needs attention and consideration (Coombs, 2007).
Since student fees mainly come from the parents' pockets, parents should be able to get involved in the vote. Ignoring this population will cause such complaints as "we pay for education" and "who cares about sitting in a new and comfy couch?" Coombs talks a lot about maintaining good relationships, and the school's relationship with parents will largely affect its future admission, fundings, and most importantly reputation. Parents choose universities based on its academic capabilities, faculty and resources over how perfect the campus looks.
Like parents, alumni is another integral part of N.C. State culture who contribute (by donation, etc.) to many projects such as James Hunt Library. Some alumni participate actively in school activities and involve in a few decision-making processes, thus they will expect to have a say in this renovation plan. From the Fighting Sioux case, we all see how powerful and influential a donor can be. In other words, the school needs to consider the opinions of the alumni as well as of the students. The October 5th voting will exclude the alumni, which may never make the new Talley to be the place "where alums will be proud to bring their families, to reunite with their college friends and to bask in the Wolfpack family spirit" as Rally4Talley.com claimed.
Last but not least, faculty is considered as the asset of a university. Their opinions and thoughts should never be overlooked. Professors from different disciplines may bring various insights to the plan, which helps the school make a well-informed and wise decision.
Therefore, it is not well-thought decision to have the renovation plan decided by students only. This may cause the other stakeholders to complain and destroy the 'Wolfpack family spirit' as well as the school reputation as an open-minded organization.
Possible ways to solve the crisis may be involving the above groups into the decision-making. It is nice to give them rights to vote. If not possible, school needs to at least organize a committee including these groups to get feedback. Grunig's two-way symmetric model suggests a feedback loop that results in organizational changes. This model will help school (the org.) get useful feedback as well as maintain good relationship with stakeholders.

Identify Differences in Student Stakeholders
Despite having an anticipated convenient place in central campus, students will be expected to pay off their comfortableness. While some advocate for the renovation, there are some others having trouble affording it.
For students with loans and other financial aids, this may add their burdens and further affect their academic performance and life. Moreover, students are expected to pay for the future. According to the renovation timeline and fee timeline (see picture 2), it is obvious that students start paying for the building before the plan is even drafted (talley fees starts 2010 spring; renovation project launches around 2011 fall and finishes in late 2013). This will disappoint most of upperclassmen (2010-2013 graduates) who will graduate from here before the building is completed. In other words, most students at school now may not be able to use the building ever.
Another important portion of stakeholders are graduate students. Surveys show that grad students participate in less student activities than undergrads. This may tell that grad students may use less of the student center than undergrad. It may not be fair to ask grad students to pay for a new place they barely visit.
School should see these differences between the stakeholders. The vote may support the plan, but if there are a ''hard-core'' group of people against it, a crisis may occur despite the final "yes". Especially during the economic recession and after the Mary Easly case, students are more concerned about how their money is spent.
School PR professionals should address specifically to upperclassmen and grad students in order to keep them on the same page. Certain compensations could be made as a return of supporting the voting results, namely extending library/career/etc. services after graduation.
Campus Affords No More Constructions
Like other construction projects on campus (the Hillsborough street), this renovation plan will cause some changes in pedestrian and vehicular circulation in central campus. Some pathways will be closed if necessary. The N.C. State community is overwhelmed with the construction problems since early 2009.
Continuing construction may cause the stakeholders to question the efficacy of the school. With a new construction impeding student life and study, crisis may occur after proposal approved. The best practice for this case is to finish current construction projects first before discussing new ones.
Good PR professionals should be able to inform the management the potential of crises based upon what is going on now. Case studies of other organizations may be a effective proof to impact the decision-making process. Hopefully this plan may not turn into campus crisis, but the "beauty" of a crisis plan is getting everything ready beforehand.

Resources
1. Coombs, W. T. (2007). Ongoing crisis communication (2nd ed.). Los Angeles: Sage.
2. Atrium Food Court & Talley Student Center Renovation & Expansion Indebtedness Fee Proposal from the Division of Student Affairs: http://www.ncsu.edu/student_affairs/feereview/
3. Rally4Talley FAQ: http://www.rally4talley.com
4. News from Technician: http://www.technicianonline.com
5. Enrollment Statistics: acquired from several universities' official websites.