By Jake Rossen
By Jesse Marx
By Michelle LeBow
By Alleen Brown
By Maggie LaMaack
By CP Staff
By Jesse Marx
In Minnesota, dissatisfaction with U S West has frequently attracted the attention of the Public Utilities Commission and the Department of Public Service--the two agencies charged with regulating monopoly companies that provide services critical to the state's economy, including the phone, gas, and electric utilities. In August 1994, after a summer of steadily rising complaints about U S West, the public-service department (which has since been folded into the Department of Commerce) began a probe into the company's service record in Minnesota.
Nearly a year later, the agency released a report detailing a variety of service problems, including poor response times to repairs, slow installations, lackluster attention to customer calls, and failure to report all of the customer complaints it received. The phone company's performance was in violation of state rules pertaining to quality of service; more important, the study declared, the state's standards--many of which had been developed in the 1960s and 1970s--were not sufficient to cover the technologies, possibilities, and expectations of the 1990s.
Once the public-service department issued its report, a comment period ensued, with other parties such as the state Attorney General's Office and U S West offering responses. In February 1996 the state agencies and the company came to an agreement on new standards for phone-service quality. According to that settlement, U S West could be fined anywhere from $100 to $5,000 a day if it didn't fix telephone outages within 24 hours; between $100 and $5,000 a day if it didn't answer customer calls within 20 seconds; and up to $750,000 a year if it had too many primary phone lines that took longer than 30 days to install.
In January 1999 that agreement was replaced by a system called the Alternative Form of Regulation pact, or AFOR--a deal billed as a new way for the state to monitor U S West's business. As part of that agreement, the state relaxed some of its rules about the pricing of certain phone services, and U S West promised to meet specific customer-service goals. If the company violated those standards, it would again face penalties between $100 and $5,000 per day.
Thus far, the agreements haven't seemed to have much effect on U S West. According to documents obtained by City Pages through a Minnesota Data Practices Act request, the number of complaints against U S West more than tripled in the three years after the original pact, rising from 115 in July 1996 to 358 in June 1999. In addition, in July 1996 the quarterly reports the company must file with the PUC showed 86 "held orders," or cases when a customer had to wait for a new phone line for more than a month. By December 1996 that number was down to just 10; as of June 1999 it had rocketed back up to 220.
U S West's goal for held orders is that there should be no more than approximately 115 each month. While the company acknowledges that it did not adhere to that standard for most of 1999, officials say this year it is meeting the objective. Though the company originally refused to open its recent service records to City Pages, saying that anything less than six months old was protected as a "trade secret," just before press time it provided service data through March. According to those numbers, held orders have been on a steady decline since November, with only 31 this past March. Complaints were down in November (to 173) but have risen again this year, reaching 300 in March.
The violations have cost U S West, the records show. Since 1995 the company has been fined nearly $6.4 million for failing to meet its minimum goals, according to commerce department records. Based on the firm's performance through September 1999, fines for that year would total another $4.5 million (the final figures have not yet been tallied).
Throughout the state's review of the proposed merger, U S West's chronic service problems have been a major point of contention. According to documents prepared by the commerce department, U S West offered regulators a lot of reasons for why it had failed to meet Minnesota's standards: Even the new rules were inadequate to measure the changing telecommunications industry, the company argued. Customer demand had been higher than forecast. A tight labor market had slowed hirings, which in turn delayed repairs on aging equipment, switches, and wires. And severe weather had made matters worse.
State officials, however, were not impressed. U S West, says Anthony Mendoza, the commerce department's assistant commissioner for telecommunications, has refused to make the kind of investments required to upgrade equipment, hire more customer-service reps, and the like. "They have not done it," he says flatly. "They have not allocated capital to these areas of concern." In comments on the merger sent to the Public Utilities Commission in January, Mendoza's department concluded that "U S West appears willing to pay certain levels of penalties rather than strive for a performance level that would meet its service-quality obligations."
Not so, says U S West's Hisley. "We very much want our service to be at a level that meets our expectations, our customers' expectations, and our regulators' expectations," she stresses. "We're working as hard as we can to make sure all of our service is at that level." In fact, Hisley says, during each of the past five years, the phone company has invested an average of $300 million in Minnesota, and much of that money has been spent to improve switching systems and lay cable to new developments.