Where's the QOS?

Ameritech's service performance slammed Anecdotal evidence of poor service from SBC Communications/Ameritech abounds.

It takes more than two weeks to install a friend's line in a new apartment. A brother-in-law waits three weeks for his phone line to get repaired. A co-worker waits 40 minutes to speak to a customer service representative.

In an unprecedented action, the heads of five state public utility commissions (PUCs) presented these problems not as anecdotes but as a pattern representing "a complete lack of focus from the senior management of SBC in addressing basic service quality."

According to regulators from Illinois, Indiana, Michigan, Ohio and Wisconsin, Ameritech service quality does not meet the minimum standards. The problem manifested at the beginning of this year and has grown worse, the regulators said. In Wisconsin, the number of quality of service (QOS) complaints against Ameritech rose more than 800% since May, said Ave Bie, chairperson of the Wisconsin Public Service Commission.

At a press conference in Chicago, the regulators called upon SBC/Ameritech senior management to address operational deficiencies and appear before a joint PUC meeting to answer questions on these service quality issues.

An SBC spokesman said it would send representatives to the joint PUC, though exactly who will appear has not been determined, and no date for the meeting has been set.

The spokesman acknowledged that the company is facing a service backlog in installations and repairs. However, SBC took steps to address the service problem before the state PUCs joined forces, releasing a plan in mid-September that calls for the hiring of more than 500 new technicians this year alone, he said. The PUCs have rejected the plan, saying the proposed remedies won't meet minimum service standards and would not provide adequate or widespread compensation to customers who have been inconvenienced by poor service.

The complaints against Ameritech mirror a trend found among all the RBOCs. According to the FCC, the percentage of dissatisfied residential RBOC customers rose from about 11% in 1997 to more than 15% in 1999.

Though it is unclear whether the entire change can be attributed to an actual decline in service or increased customer expectations, "from a market perspective, as [RBOCs] face competition, it only really matters what the customer thinks," said Bob Lane, program manager for The Yankee Group's consumer market convergence planning service. The threat of losing customers to competitive carriers is forcing the large incumbent local exchange carriers (ILECs) to improve their QOS, he said.

Regulators agree, saying that their joint action is a warning to SBC investors. "We need the shareholders to know that their financial stake could conceivably be at risk here," said Alan Schriber, chairman of the Ohio PUC.

But Thomas Long, senior telecommunications attorney for The Utility Reform Network, does not believe competition is enough incentive to yield improved customer service. Calling local competition an "experiment [that] isn't working," Long advocates a change in state regulatory procedures.

States often cannot enforce quality service because too much power rests with the federal government, Long said.

"California has to beg the Fed to take action," he said. "State regulators should not be put in the position to have to beg to solve problems that can doom a state's economy."

State PUCs should be given the power to review mergers, levy fines and audit telcos' performance reports, Long said.

Many state regulators are starting to clamor for more power. This situation might result in Wisconsin granting its PUC power that it does not currently have, including the authority to review mergers, Bie said.

While merger review may have been a powerful tool in the past, it might be too late for regulators hoping to receive concessions and commitments from the large ILECs, said Shane Greenstein, an associate professor at Northwestern University's Kellogg Graduate School of Management. The market is so consolidated that "we are way past the days" of the FCC and the Department of Justice allowing another megamerger, he said.