Meaningless fines lead to AT&T’s, Frontier’s deplorable quality in California

by Steve Blum • , , , ,

Verizon taft 2dec2014

A study of AT&T’s, Verizon’s and Frontier Communications’ telephone network quality conducted by the California Public Utilities Commission shows that overall performance is poor across California. Low income communities have worse service and more outages than high income ones, but it’s not particularly good anywhere

Maximum Customer Trouble Report Rates of 6%, 8% or 10% of switched access lines per month (based on wire center size) are unduely generous because failure rates as high as these can hardly constitute acceptable service quality.

The apparently overly generous standard adopted…for Trouble Reports per Hundred access lines is in stark contrast to the requirement…that 90% of all out-of-service conditions are to be cleared within 24 hours. In fact, with the exception of the unique situation extant during the months of February and March 2016, this requirement has never been met by either AT&T or by Verizon/Frontier either on a companywide or on an individual wire center basis.

Although AT&T and Frontier, which now owns Verizon’s wireline systems, face fines, in theory, in practice they don’t: the CPUC allows them to spend the money on system maintenance and upgrades. In theory, it’s supposed to be extra maintenance and upgrade spending, but the loose accounting standards the CPUC applies makes that requirement meaningless.

The study recommends that “fines imposed due to an ILEC’s failure to meet service quality standards should be high enough so as to have the same financial consequences as poor service quality under competitive market conditions”. It doesn’t say how high that should be, but Verizon’s “unique situation” proved that telcos can perform when real money is on the line…

Verizon had actually cleared 91.58% and 92.64% of [out of service] conditions “within 24-hours of receiving notice of the out of service condition” for the months of February and March 2016, respectively, thus seemingly meeting the…requirement as the Commission had directed to be achieved as a precondition for the closing [of the sale of Californian systems to Frontier]. Faced with a powerful $10.5-billion financial incentive to do whatever was necessary to meet this condition, Verizon managed to make it happen – perhaps by importing personnel from some of its other…operations outside of California. However, this two-month compliance…was clearly an anomaly. When Frontier filed its…report for the second quarter of 2016…it showed 24-hour completion percentages for April, May and June 2016 of only 42.92%, 20.85%, and 72.35%, respectively.

It’s time for the CPUC to disavow its cynical decision to allow AT&T and Frontier to keep the money they would otherwise have to pay out in fines.

For more background documents, click here.