Dissenting PUC Members Praise Phone Service

Three months after a state report criticized local telephone service in California, two Public Utilities Commission members issued an alternative view Wednesday that describes service as good to excellent.

The dissenting analysis by Commissioner Susan P. Kennedy and PUC President Michael R. Peevey sets the stage for a showdown next month as the commission considers stricter oversight of the state’s dominant local carriers, SBC Communications Inc. and Verizon Communications Inc.

Determining the quality of local service is part of a review of the PUC’s overall regulation of SBC and Verizon. Poor service records could scuttle the so-called New Regulatory Framework, instituted in 1990 to base rates on good service as an incentive to carriers. Previously, rates were based in large part on a carrier’s earnings.

“What we did is a purely objective analysis of service performance,” Kennedy said. “We measured every area against state and federal criteria” and against a national average for performance by the top telecommunications firms in the U.S.

“The fact is, they provide good overall service quality,” she said. “There’s not a lot of room for interpretation.”

Not so, said Denise Mann, manager of the telecommunications branch for the PUC’s independent Office of Ratepayer Advocates. “The alternate puts a very pretty spin on things to say the regulatory framework is working fine,” said Mann, who maintained that customers are not getting better service.

In March, a report by a PUC judge found that SBC and Verizon failed to provide timely installation and repairs, among other things, and that the state’s regulatory scheme doesn’t ensure good phone service. The findings suggested that the regulatory framework needs revamping.

Both the original proposal and the alternate are scheduled to be considered by the five-member commission at a July 10 public meeting.

Kennedy said the original decision focused on only two of seven criteria and compared SBC with Verizon, rather than each of them against federal standards and the industry’s performance in other states.

Kennedy’s alternate found that Verizon provides “excellent customer service” and that SBC, the state’s dominant carrier, “offers generally good-quality service” but falters in some areas such as delays in answering consumer calls on billing problems.

SBC and Verizon executives were elated by the alternate.

“I like the fact that this decision represents a comprehensive review of the record,” said Lora Watts, SBC’s California president of external affairs. “It recognizes that the company is providing good service quality.”

Verizon’s California president, Timothy J. McCallion, said the review “does a very good job” of setting a baseline measurement for future performance reviews.

“It’s important to recognize that the regulatory framework” does give telephone companies incentive to provide service to their customers, McCallion said. “It allows the PUC to move forward with progressive regulation that is less focused on rates of return and more on new products and services to be provided in a competitive environment.”

Verizon, he said, was harmed by the “tone” of the original proposal. “This one,” he said, “just sets the record straight.”