SBC Ameritech wholesale competition fines double in Illinois in June

Public utility commissions in four of the five Midwest states served by SBC Ameritech significantly increased in June the fines levied against the carrier for violating wholesale competition conditions of the 1999 merger agreement.

The largest increase was in Illinois, where fines doubled to $956,355 from the $474,497 levied in May. Fines also increased in Wisconsin (to $4.2 million from $2.9 million), in Michigan (to $699,239 from $492,06) and in Indiana (to $75,036 from $5,500). Only in Ohio did the carrier see a decrease in fines in June, to $113,640 from $234,357.

“Ameritech has been telling people that they have fixed their problems, but the fact that fines have doubled negates those statements,” said a spokesman for competitive carrier AT&T.

However, a spokesman for the Illinois Commerce Commission (ICC) said that the heavier fines might have more to do with improved reporting techniques than any deterioration of the company’s performance, just as crime rates sometimes jump because police departments do a better job of compiling the statistics.

“We can’t conclude yet that their performance has deteriorated. On the retail side, their performance is hanging on, which is a positive. It might be that they’re not doing any worse, but that they’re measuring better,” said the spokesman.

What has deteriorated is the relationship between SBC Ameritech and third-party tester KPMG, which has accused the carrier of being less than responsive to its requests for data to the point where a performance metric review scheduled to be completed by the end of May, 2002 has been pushed back to November – at the earliest - according to the ICC spokesman.

For its part, Ameritech petitioned the ICC to replace KPMG as auditor, which amused AT&T.

“That’s like trying to fire the teacher when you can’t pass a test,” said AT&T’s spokesman.

The ICC spokesman said the commission denied Ameritech’s request to remove KPMG after a particularly contentious debate. “There was a lot of finger pointing on both sides,” said the spokesman.

An SBC Ameritech spokesman said the carrier has spent millions of dollars to enhance the systems that CLECs access.

“We are providing outstanding wholesale performance. We hit our marks on average more than 90 percent of the time - an ‘A’ in anyone's book,” he said. “And the proof is in the number of competitors using our wholesale service to offer service to their customers.”

He added that one of those enhancements – a system conversion – is the primary trigger for the fines because it resulted in Ameritech’s system being available to competitors 99.2% of the time in June, compared to the benchmark of 99.5%.

“For a three tenths of one percent variance, we had to pay nearly $1 million across our region - and that was on top of the millions of dollars we spent to enhance our system,” he said.

Too bad, said AT&T.

“No one held a gun to their head when they got their merger approved. They’re the ones who agreed to these conditions,” AT&T’s spokesman said.

Reporter’s Notebook

The United States Department of Justice (DOJ) has recommended that the FCC approve Qwest Communication’s four-state application to provide long-distance service in Montana, Utah, Washington, and Wyoming, provided that the commission assures itself that new evidence provided by the carrier addresses DOJ concerns with the application as filed. Specifically, the DOJ said that Qwest’s assertions that it provides adequate manual order processing and electronically auditable billing for unbundled network element platform services “remain questionable.” The DOJ also questioned whether Qwest’s UNE rates in Montana and Wyoming are “appropriately cost-based.” However, the DOJ also said that Qwest’s application as filed demonstrates that is has succeeded in opening its local markets in the four-state region “in many respects.” According to data contained in the DOJ evaluation, competitive carriers account for 24.8% of total lines in Utah, 20.2% in Washington, 11.6% in Wyoming and 5.9% in Montana. However, CLECs control 46.9% of business lines in Utah, 43.5% in Washington, 25.2% in Wyoming and 14.2% in Montana.