Copyright 1999 Federal News Service, Inc.
Federal News Service
NOVEMBER 4, 1999, THURSDAY
SECTION: IN THE NEWS
LENGTH:
2395 words
HEADLINE: PREPARED TESTIMONY OF
RICK
TIDWELL
OF BIRCH TELECOM, INC.
BEFORE THE SENATE
COMMITTEE ON COMMERCE, SCIENCE AND TRANSPORTATION
BODY:
Senator Burns and members of the Committee, I am Rick Tidwell, Vice
President of Regulatory and Industry Relations for Birch Telecom, Inc, a small
but growing competitive local exchange carrier with principal offices in Kansas
City, Missouri and Emporia, Kansas. Birch is a member of the Competitive
Telecommunications Association, also known as CompTel.
Thank you for
inviting me to testify before the Committee today on the state of local
competition in our nation. I will focus my remarks on issues influencing the
development of competition in the states where Birch currently operates -
Kansas, Missouri and Texas. All three states fall within Southwestern Bell's
territory.
Before I turn to the specific issues affecting the development of
local telecommunications competition and the availability of consumer choice in
this region of the country, it may be helpful if I provide you with a brief
description of Birch.
About Birch
Birch currently serves approximately
90,000 access lines. We employ 850 people, including 250 at our headquarters in
Kansas City, and 250 employees in Emporia, Kansas where our customer service and
call center is located.
In early, 1997, Birch began operations in Kansas as
a reseller of Southwestern Bell's local exchange services. Resale operations
were later expanded to Missouri. In 1998 Birch began switch based operations in
some Missouri markets. In 1999, Birch began service in Texas through the use of
the unbundled network element platform ("UNE- P") service.
In Missouri, we
operate switches in Kansas City and St. Louis. We have customers located
throughout the state, including Carthage, Chillicothe, St. Joseph and
Springfield. In Kansas, we have customers in every county of the state, and we
have substantial operations in Dodge City, Emporia, Lawrence, Manhattan, Salina,
Topeka and Wichita (where we also operate a switch). In Texas, we recently began
operations in Austin, Beaumont, Corpus Christi, Dallas/Fort Worth, Houston,
Lubbock, Tyler/Longview and Waco.
We offer a menu that includes local and
long distance services, high- speed internet access services and customer
premises equipment to residential and small and mid-sized business customers.
Forty percent of our customers are residential customers.
In addition to our
voice-oriented circuit switches in Kansas City, St. Louis and Wichita that route
local and long distance calls, we are deploying an ATM packet switching
net-work. Packet switches initially are being installed in Kansas City, St.
Louis, Wichita andFort Worth. These data-oriented packet switches will be linked
by high-speed ATM transport facilities.
We provide our services through our
own switching equipment and, pursuant to provisions of the
Telecommunications Act of 1996, through use of leased network
facilities and resold services obtained primarily from Southwestern Bell.
Southwestern Bell is also our principal competitor. Although it has been a
struggle, and although we still are a small company, we have grown into one of
the larger competitive local exchange carriers ("CLECs") in the territory,
served by Southwestern Bell.
That's who we are today. Tomorrow, if we
continue to work harder and smarter than Southwestern Bell and our other
competitors, we expect to emerge as a major regional provider of
telecommunications services to small and mid-sized businesses and residential
customers. However, unless Southwestern Bell has the incentives to cooperate
actively in complying fully with its duties under the 1996 Act, the development
of competition and the benefits it brings to consumers will be seriously
retarded. Southwestern Bell's Duties And Incentives Under The 1996 Act The
duties and incentives of Southwestern Bell and other incumbent carriers to open
their local exchange markets to competition were set by the 1996 Act, a law
which several of you on the Committee were instrumental in fashioning. Overall,
Birch believes the Act established a reasonable balance between the interests of
incumbent local exchange carriers and competitors, such as Birch, who want to
enter local markets. Most important, the Act recognized that incumbent carriers
have strong economic motives tomaintain their de facto control of essential
bottleneck facilities, and that a combination of duties and incentives would be
required to open the local exchange market.
Sections 251 and 252 of the Act
set forth the duties of incumbents to open their markets to new entrants by
mandating interconnection, access to unbundled network elements and resale on
just, reasonable and nondiscriminatory terms. Access to such facilities and
services is absolutely essential to CLECs such as Birch.
The incumbent Bell
Companies' incentive is contained in Section 271 of the Act which allows a Bell
Company into in-region long distance markets once it has opened its monopoly
local markets to competition. Until recently, the Bell Companies did not appear
to have been strongly incented by the prospect of offering long distance voice
sen,ice. Perhaps that is because prices and profit margins for long distance
voice traffic have been plummeting since the passage of the Act.
More
recently, however, Bell Companies' behavior evidences somewhat stronger interest
in entering the interLATA market. Birch believes that apparent stronger interest
stems from the Bells' desire to enter the rapidly growing market for interLATA
data services and their desire to become the complete provider of services for
customers, including everything from local wireline and wireless service to
broadband internet and data services.
Southwestern Bell's Incentives Under
Its Proposed Merger with Ameritech Another incentive for Southwestern Bell to
open its local exchange market to competition stems from its proposed merger
with Ameritech. The Federal Communications Commission ("FCC"), in approving the
transfer of control of licenses triggered by the proposed merger, imposed a
variety of conditions, including conditions designed to push Southwestern Bell
toward opening its local markets.
These conditions, coupled with the
performance standards and remedies that Southwestern Bell has agreed to in
Section 271 proceedings in Texas, are encouraging steps. They lay out a plan
that leads toward the opening of Southwestern Bell's local markets. However, to
implement the plan, Southwestern Bell will have to dedicate adequate resources
to correct the many deficiencies in its current methods of providing CLECs
interconnection, UNE and resale services. Moreover, Southwestern Bell requires a
fundamental change its mindset in its dealings with CLECs such as Birch.
Birch's Experience To Date With Southwestern Bell
Even with the
duties and incentives the 1996 Act imposes on and offers to the Bell Companies
to open their local exchange markets to competition, Birch's experience in
dealing with Southwestern Bell has been frustrating. The following is a list of
some of the Southwestern Bell tactics Birch has encountered:
Unreasonable
"UNE-P" charges: "UNE-P" allows a competitor to purchase a complete package of
network clements combined to provide service to the competitor's customer. Even
though Southwestern Bell has signed agreements in Texas and Missouri allowing
UNE-P Birch cannot get Southwestern Bell to provide the service in Kansas
without unreasonable recombination charges. Additionally in Texas, when
converting existing service Birch must only pay the conversion charges. In
Kansas and Missouri Southwestern Bell requires Birch to pay the non-recurring
charges for new installation of the service even though all the facilities are
in place and working. These charges are unnecessary and unreasonable yet, in
order to do business Birch has no choice but to pay them. This is especially
disconcerting in the rural areas as there is little chance that a secondary
network such as a cable TV system or fiber provider will enter the smaller
markets due to the limited total market size. As a result, Southwestern Bell
will most liner remain the only provider of outside plant facilities for many of
these markets for years to come.
Resale Restrictions: Southwestern Bell
refuses to allow Birch to resell customer specific arrangements or contract
arrangements at the standard resale discount. In fact, Southwestern Bell even
refuses to allow birch to assume the liability on those contracts and resell
them to Birch's customers with no reduction in the amounts payable to
Southwestern Bell. Rather, Southwestern Bell takes the position that any attempt
to convert the service covered by the contract requires the customer to pay
large termination fees to Southwestern Bell. The only exception to this is Texas
in which Southwestern Bell was ordered to allow assumption of existing
contracts.
Inadequate Operational Support Systems: These systems simply are
inadequate and fail to provide competitors such as Birch the ability to provide
their customers the same level of service as Southwestern Bell representatives
are able to provide Southwestern Bell customer's using Southwestern Bell's
internal systems, as required by the statute. One of the major issues in Texas
in the Southwestern Bell 271 proceeding is the issue of OSS systems and their
current "state of readiness" and scalability. In September, Birch filed a
complaint in Texas regarding a number of OSS issues. In subsequent meetings and
conference calls Birch has found that there are many flaws in Southwestern
Bell's provisioning systems. One problem in particular is that of coordination
of orders. When a CLEC places an order for the conversion of a service under
UNE-P, Southwestern Bell's back-office systems actually generate 3 orders, a
Disconnect order, a New order, and a Change order. Not all orders are generated
by the same system and the orders do not appear to be coordinated in any way. As
a result, main' customers converting to Birch arc experiencing loss of dialtone
at conversion. To make matters worse, Southwestern Bell has not provided an
expedited method for restoring service and consequently customers have lost
dial-tone for days at a time.
Omitted Directory Listings: Since 1997 Birch
has from time to time found customers that had listings in the Southwestern Bell
telephone directory omitted after they converted to Birch. In late 1998,
Southwestern Bell admitted that a problem had been found and reported that it
had been fixed. Yet omissions still occur. This issue continues to haunt CLECs.
Birch first reported the problem almost two years ago, and Southwestern Bell
still has not completely eliminated the problem.
Premature Disconnection of
Service: In several cases Southwestern Bell has disconnected the customer's
Southwestern Bell service before the specified time for conversion of the
customer service to Birch, leaving the customer without any telephone service.
This has happened to business customers. The end result is that some customers
are now afraid to move their service. This continues to occur for both our UNE-P
and switch based customers and is related to inadequate OSS identified above.
Untimely and Inaccurate Billing: Southwestern Bell ignores due dates and
deadlines. Over the last year Southwestern Bell has repeatedly failed to deliver
timely and accurate billing information which Birch must have in order to bill
our customers. Southwestern Bell's failure to provide the billing records in the
proper manner forced Birch to suspend its own billing, bringing Birch's cash
flow to a halt. Yet, Southwestern Bell demands prompt payments.
There are
many other examples of Southwestern Bell's deficiencies. Upon request, I will be
glad to furnish the Committee a more detailed list of Birch's grievances. I will
end this discussion by highlighting one of Southwestern Bell's most effective
tactics for frustrating the development of competition -- under-resourcing its
CLEC account teams. Inadequate CLEC Account Team Resources.
For years,
interexchange carrier account teams have been assigned a technical
representative to deal with the many operational issues that arise. We
understand Southwestern Bell CLEC account teams have requested this technical
support and yet Southwestern Bell management has not allocated the required
resources. The results are unnecessary service disruptions and delays in
providing services for companies like Birch, all of which serves to protect
Southwestern Bell's monopoly market from competitive incursions.
Southwestern Bell's Local Service Center (LSC) and Local Operations Center
(LOC) also are understaffed. Here is a recent example. A few weeks ago, Birch
personnel had three trouble reports to work with Southwestern Bell. Three
separate Birch employees called Southwestern Bell's CAST center where Birch has
been instructed to call. One of the calls was answered. The other taro calls
rolled into a recording advising the caller to stay on the line until someone
answered. The call that was answered lasted 45 minutes.
During this time the
other calls were left on hold. Birch escalated the problem toSouthwestern Bell's
LOC management. The report back to Birch indicated that only one person was
available at the time of the calls. I want to emphasize that this Southwestern
Bell group is not a group dedicated to Birch but is used by many CLECs. Birch
has no idea how many other trouble calls went unanswered during that time. The
Need for an "Attitude Adjustment."
In a meeting in May 1998, the Texas
Public Utility Commission was characterized as saying that Southwestern Bell
needs an "attitude adjustment." At Birch we don't feel that Southwestern Bell
has taken this advice to heart. It "talks the talk" but has yet to "walk the
walk." Without a genuine change of attitude and a commitment of the necessary
resources by Southwestern Bell, Birch and other CLECs will continue to be
frustrated in their efforts to bring consumers choice in local
telecommunications services in Southwestern Bell's territories.
Birch would
welcome tangible evidence that Southwestern Bell has experienced such an
adjustment without the need for further legislation. Absent such evidence, the
types of penalties contemplated in Senator Hollings' Bill, S. 1312, may be
necessary.
That concludes my testimony. Thank you for your time and
attention to this important matter.
END
LOAD-DATE: November 5, 1999
