Copyright 2000 The Washington Post
The Washington
Post
December 16, 2000, Saturday, Final Edition
SECTION: FINANCIAL; Pg. E01
LENGTH: 1555 words
HEADLINE:
Local Phone Frustration; CLECs Blame Bells, Bells Blame Hookups, Some Blame
Agencies
BYLINE: Yuki Noguchi, Washington Post Staff
Writer
BODY:
Carol Warden thought she could
knock some overhead off her music shop's budget by signing up for alternative
local phone service.
Instead, switching turned out to be one of the
worst things ever to happen to Dale Music Co. The Silver Spring store faced
weeks of spotty service on its phone, fax and modem lines--costing Warden at
least $ 14,000 in lost revenue, she said. Orders couldn't come in, Internet
sales screeched to a halt and foot traffic dwindled as longtime customers--and
even Warden's aunt--couldn't get through and feared the shop had shut its doors
after 30 years in business.
Warden's new phone company, Allegiance
Telecom Inc., and her original carrier, Verizon Communications Inc., each
suggested the other might be at fault. Embittered, Warden switched back to
Verizon after only six weeks. Nearly five years after the government deregulated
local telephone systems, competition still results in plenty of crossed wires.
In many regions there are several alternative phone companies, some with
thousands of satisfied customers. But many others aren't happy, with small
businesses in particular vulnerable to service delays and disruptions.
The phone companies explain the problems by pointing to the technical
and administrative difficulties in moving service from a former Bell monopoly to
a start-up. In addition, many of the new companies say they suspect that the
Bells drag their feet when it comes to giving up control of a customer. Some
analysts also question whether federal regulators are sufficiently vigilant
about encouraging competition.
"This is an industry in distress, and I
don't think the regulators are doing their job," said Donald T. Lynch, president
and chief executive of Lynch Associates, a Fairfax-based telecommunications
consulting firm. Though the Federal Communications Commission monitors
competition, it ought to require the Bells to switch local customers more
quickly, he said.
The alternative companies--known as competitive local
exchange carriers, or CLECs--were started after passage of the
Telecommunications Act of 1996, marketing themselves as
responsive, customer-friendly alternatives to the former Bells.
Collectively, the newcomers have made some inroads, but many of them
have faltered, and those have been severely punished on Wall Street. In most
places, they're still very much the underdog: The Bells retain 93 percent of the
local phone market nationwide, according to the FCC. Industry analysts agree
that competing in the local market has proved to be more complicated than
hooking up alternative long-distance, and building the "last mile" of wiring
into individual buildings is much harder than laying fiber-optic lines between
cities.
To provide their own service, many of the start-ups rely on the
incumbent carriers to physically hook up their new customers through the old
network. In the Washington region, Allegiance, Net2000 Communications Inc.,
Arbros Communications Inc., XO Communications Inc. and others depend on Verizon
to access connections between the phone company's switching center and a
specific building.
When new connections don't work, the newcomers "are
going to be blamed regardless of where the problem is, and rightly so," because
they promise better service, said Royce Holland, Allegiance Telecom's chairman
and chief executive. Trying to troubleshoot for customers is "a daily problem
for us," he said.
Verizon officials say they have every interest in
serving the alternative providers--not as competitors, but as wholesale
customers, a growing part of the company's business.
State and federal
regulators have the authority to assess millions of dollars in fines against
Verizon if it doesn't meet performance standards in cooperating with the
competitive carriers, said Claire Beth Nogay, vice president of CLEC operations
for Verizon. "That's enough to get my attention," she said.
FCC
officials, who monitor the Bells' competitive performance on a monthly basis,
say such standards are working. The Bells have an interest in seeing the local
markets opened up to competition, because until they are judged to be
competitive they aren't allowed to expand into the long-distance market
themselves or to carry lucrative Internet traffic, said Michelle Carey, chief of
the FCC's common carrier bureau policy division.
But Lynch, the Fairfax
consultant, said the FCC's incentives are not enough to ensure competition. He
said as long distance becomes less profitable, the Bells are becoming less
interested in getting permission to offer it by trading their strengths in the
local market.
Holland, the Allegiance executive, said about 5 percent of
service orders placed with start-up companies like his get lost in the paper
shuffle between the old and new carriers. That's better than it used to be; he
estimates as many as 40 percent were lost three years ago.
Most of those
that fall through the cracks now, Holland said, are small companies like Dale
Music that don't need more than several phone and modem lines and are "largely
ignored by the market."
Warden signed up Dale Music with Allegiance a
year ago, after calculating she'd be able to cut $ 163.46 off her $ 800-a-month
local phone bills for answering service, a toll-free line, and two extra
telephone lines for her modem and fax.
Warden and her staff either
e-mailed or called Allegiance at least three times--Feb. 25, March 16 and June
6--to see when she'd receive her new service. During that time, records from
both Allegiance and Verizon (then known as Bell Atlantic Corp.) indicate their
data didn't match up, resulting in two failed attempts to change the lines at
Verizon's switching center.
Finally, on June 27--Warden's birthday--the
lines were switched over to Allegiance's network, but the phone system was
riddled with problems. Customers were getting cut off, the toll-free line was
transfering to a Spanish-speaking travel agency in Takoma Park, and Dale Music's
original five lines were somehow reduced to a single connection, forcing
employees to switch back and forth from handset to fax on the same line.
Those problems might have been caused by a faulty connection through
Verizon, according to John Lanza, senior director of Allegiance's national
repair center. Nogay at Verizon, however, said the symptoms likely resulted from
software problems on Allegiance's end. In this case, as in many such disputes,
it may not be possible to sift some definitive finding of fault out of the paper
trail.
Meanwhile, Warden's troubles continued: An 18-day strike against
Verizon in mid-August kept Dale Music from switching back to that company's
network until Sept. 21, but Allegiance continued to bill the store into October,
due to "internal" billing problems, according to Allegiance. Those problems have
been remedied.
"It was your worst nightmare, if you're in business,"
said Warden.
Similar problems have scarred Tom Hockey, who vows he "will
never switch again." His Silver Spring business, TNT Import Auto Parts Inc.,
lost service for 10 days in October. The outage, which followed his attempt to
switch to a new carrier, forced him to temporarily cut back on his 13-person
staff, eat $ 30,000 in lost business, and suffer the frustration and confusion
of dealing with two phone companies--both of which at one point denied TNT was
in its customer database, he said.
Incensed, Hockey paid $ 11,000 for a
half-page advertisement in The Washington Post in October, informing customers
and vendors of the extended phone problems because "I didn't want other
businesses doing what I did" and switching phone service, he said.
Last
week, TNT took out another ad announcing the problem was solved.
Both
the Bells and their challengers say they are making progress in updating the
systems that track customer information. The orders, however, are complicated by
the bundled packages of voice and Internet services offered by many telecom
providers. Business customers are demanding high-speed Internet access through
DSL, which is a digital data connection that runs on a regular phone line, and
T1 lines, which use a more expensive, higher-capacity "pipe." But buildings
aren't always set up for these connections--something incumbent carriers and
competitive phone companies alike struggle to explain to their customers.
Software developer Q-Industries Inc. moved to a Dupont Circle town house
in early August, two weeks after the firm's general counsel, Michael A. Worden,
ordered DSL service through a reseller of Covad Communications Co.'s services.
It didn't get it installed until mid-October, having been held up by various
Verizon-related delays (including random deletions of his order from the system)
and repeated reschedulings of a technician's visit, according to service
records.
"We were in such dire straits--constantly trying to meet
customers' demands using a straw when we really needed a fire hose," he said. In
the interim, the 20 employees at Q-Industries were forced to share two phone
lines to download e-mail and transmit faxes, he said, laughing in retrospect at
the tragedy of errors of his months-long installation ordeal.
"It's
pretty expensive at $ 60,000- or $ 70,000-a-year salaries to have [our
engineers] watch downloading files," he said.
LOAD-DATE: December 16, 2000
