The blame game

Covad Communications intentionally blamed Verizon Communications for tens of thousands of Covad's own technical problems during DSL installations, Verizon claimed in a federal lawsuit filed last week.

Verizon also accuses Covad of knowingly establishing business processes that would result in numerous incorrect trouble reports. Verizon is seeking unspecified damages and an injunction to halt the activity.

Covad produced more than 22,000 false trouble tickets last year, said William Barr, Verizon's executive vice president and general counsel, who added that most resulted in truck rolls that together cost Verizon millions of dollars.

According to Barr, these false trouble tickets are part of a “deliberate scheme by Covad's management to formally and publicly report as attributable to the ILEC [independent local exchange carrier], or Verizon, Covad's own service failures. They did that to shift the cost of their own service failures to Verizon.”

The suit claims that these reports were used by Covad to show that Verizon failed to meet service performance standards, resulting in payments from Verizon to the carrier. Covad is also accused of using these reports to illustrate to the public and to regulators that Verizon is anticompetitive. The news has prompted at least one other ILEC, BellSouth, to review its relationship with Covad.

According to Barr, the company has 26 affidavits from former Covad employees to support these claims. About half these employees were laid off from Covad.

In some of these affidavits, the unnamed employees say they were ordered to file false trouble tickets by people who, by their description in the affidavits, appear to be in middle management positions. Other employees blame poor training and business practices as a cause of incorrect trouble tickets being filed, but fall short of saying that making these filings was company policy.

Dhruv Khanna, Covad's executive vice president, general counsel and secretary, dismissed the allegations as being media-driven. According to Khanna, Covad has no motivation to knowingly report incorrect tickets because Covad has to pay for trouble tickets that turn out to be its own fault. These payments range from $50 to $150.

“The Wall Street Journal heard about the lawsuit before I did,” he said. “It's definitely oriented towards the press rather than any serious issues…. If there were 22,000 [incorrect trouble tickets] they should have billed me 22,000 times.”

As of press time, Covad was still calculating how many payments it made to Verizon in 2000 because of incorrect trouble tickets.

Khanna reacted negatively to Verizon's assertion that Covad's employees were undertrained.

“Before Bell Atlantic preaches to me about the training of my technicians, let them install a loop correctly in the first place. This is a supplier telling a customer they don't know how to run their business. They can go to hell.”

According to Barr, the suit should cause people to question competitive local exchange carrier (CLEC) claims of poor service from the ILECs.

“The Bells have very strong incentives to perform their wholesale obligations. What are the incentives of CLECs and data CLECs to avoid shifting costs to the wholesale platform?” he said.

Despite the allegations and the affidavits, Jeff Moore, senior analyst at Current Analysis, said that ILECs are still the source of much of the trouble between ILECs and CLECs.

“There has been tremendous competition out there to hire highly qualified technicians and installers. In that respect there's no question that some of the CLECs might have had troubles. But there's no shortage of information that RBOCs have been delinquent in providing proper service to competitive players. That's no less serious than what Verizon is alleging about Covad,” he said.